Bangalore District Court
M/S Sattva Developers Private Limited vs M/S Tata Consultancy Services Limited on 16 January, 2025
1 A.P.No.49/2022
& A.P.No.78/2022
KABC010095852022
IN THE COURT OF I ADDL. CITY CIVIL &
SESSIONS JUDGE AT BENGALURU (CCH.No.2)
Present: - Sri.B.P.Devamane, LL.M.,
I Addl. City Civil & Session Judge,
Bengaluru.
Dated this the 16th day of January 2025.
A.P.No.49/2022
c/w A.P.No.78 / 2022
PARTIES IN A.P.No.49 / 2022:
Petitioner: M/s. Maverick Property Investments
Private Limited,
A Company Incorporated under the
Companies Act, 1956,
Having Office at No.540, III Floor,
CMH Road, Indiranagar,
Bengaluru-560 038.
Rep. by its authorised representative
Sri.Kiran Poonacha.
(By Sri.M.V.Sundararaman, Adv.)
- VS -
Respondents: 1. M/s.Tata Consultancy Service Limited,
A Company incorporated under the
Companies Act, 1956
2 A.P.No.49/2022
& A.P.No.78/2022
Having its office at TCS House, 21,
D.S.Marg, Fort, Mumbai-400 001.
Also having office at:
Sheshadri Road, Bengaluru, Karnataka,
India-560 009.
Rep. By its authorised representative
Sri.K.A.Chinnappa.
2. M/s. Sattva Developers Private Limited,
A Company incorporated under the
Companies Act, 1956
Having office at 4th Floor, Salarpuria
Windsor, No.3, Ulsoor Road,
Bengaluru-560 042.
Rep. By its authorised representative
Sri.Bijay Kumar Agarwal.
3. M/s. Parth Infrastructure LLP,
A body incorporated registered under the
Limited Liability Partnership Act, 2008,
having office at Flat #7, 1st Floor, Plot
No.231, Sri.Nilayam Building, Opposite
GTV, Station (Koliwada) SION (East),
Mumbai-400 022.
Rep. by its authorised representative
Sri.Pradeep Dhandhania.
4. Hon'ble Justice Sri.Jayant Patel (Retd).
Former Judge, High Court of Karnataka,
'OM', 1, Swagat Park, Behind Jalsa Party
Plot, Thaltej, Off. S.G.Road,
Ahmedabad-380 059.
(By Sri.S.V.Giridhar, Adv. for R1
Ms.Anuparna Bordoloi, Adv. for R2
Sri.Badri Vishal, Adv. for R3)
3 A.P.No.49/2022
& A.P.No.78/2022
PARTIES IN A.P.No.78 / 2022
Petitioners: 1. M/s.Sattva Developers Private Limited,
A Company incorporated under the
Companies Act, 1956
Having its office at 4th Floor, Salarpuria
Windsor, No.3, Ulsoor Road,
Bengaluru-560 042.
Rep. by its authorised representative.
2. M/s. Parth Infrastructure LLP,
A body incorporate registered under the
Limited Liability Partnership Act, 2008,
having office at Flat #7, 1st Floor, Plot
No.231, Sri.Nilayam Building, Opposite
GTV, Station (Koliwada) SION (East),
Mumbai-400 022.
Presently having office at
No.116, 1st Floor, Churchgate
Chambers, Above Greater Bank,
5, New Marine Lines,
Mumbaiah-400 020.
Rep. by Designated Partner.
(By Ms. Anuparna Bordoloi, Adv. for
petitioner No.1
Sri.Badri Vishal, Adv. for petitioner No.2)
- VS -
Respondents: 1. M/s. Tata Consultancy Service Limited,
A Company incorporated under the
Companies Act, 1956
Having its office at TCS House, 21,
D.S.Marg, Fort, Mumbai-400 001.
4 A.P.No.49/2022
& A.P.No.78/2022
And its Branch office at SJM Towers,
#18, Sheshadri Road, Bengaluru-560 009,
Karnataka, India.
2. M/s.Maverick Property Investments Private
Limited,
A Company Incorporated under the
Companies Act, 1956,
Originally having its office at No.540,
III Floor, CMH Road, Indiranagar,
Bengaluru-560 038.
And also at:
No.583, 9th Main Road, Opp. CMH Road,
Indiranagar, 1st Stage, Bengaluru-560 038,
Karnataka.
3. Hon'ble Justice Sri.Jayant Patel (Retd).
Former Judge, High Court of Karnataka,
'OM', 1, Swagat Park, Behind Jalsa Party
Plot, Thaltej, Off. S.G.Road,
Ahmedabad-380 059.
(By Sri.S.V.Giridhar, Adv. for R1
Sri.M.V.Sundararaman, Adv. for R2
***
COMMON JUDGMENT
Both A.P.No.49/2022 and A.P.No.78/2022 arise out of the
common award dated 22.03.2021 passed in A.C.No.23/2019 by
the Arbitration Tribunal, Bengaluru, and among the same parties
hence, these petitions are taken together for discussion and
disposed by common judgment.
5 A.P.No.49/2022
& A.P.No.78/2022
2. The petitioner in A.P.No.49/2022 has filed this petition
under Sec.34 of the Arbitration and Conciliation Act, 1996 with
prayer to call for records of the Arbitration Case No.23 of 2019 from
the Arbitration and Conciliation Centre, Bengaluru (Domestic &
International) and to set aside the entirety of the impugned award
dated 22.03.2021 passed by the 4th respondent in Arbitration Case
No.23/2019 and for award costs incurred in prosecuting the present
arbitration petition.
3. The petitioners in A.P.No.78/2022 have preferred this
petition under Sec.34 of the Arbitration and Conciliation Act, 1996
being partially aggrieved, making the petitioners jointly and
severally liable for damages as stated in the operative portion of
the award dated 22.03.2021, in Paras 451(b), 451(c), 451(d),
451(2), 451(3), 451(5), 451(6) and 451(7) of the award passed by
the Hon'ble Arbitral Tribunal, in A.C.No.23/2019 before the
Arbitration and Conciliation Centre, Bengaluru.
4. Rank of the parties as mentioned in A.C.No.23/2019 is
referred in this common judgment in discussion in order to avoid
confusion. Petitioner in A.P.No.49/2022, and respondent No.2 in
A.P.No.78/2022 was respondent No.2 in A.C.No.23/2019.
Petitioner No.1 in A.P.No.78/2022 and respondent No.2 in
A.P.No.49/2022 was respondent No.1 in A.C.No.23/2019.
Petitioner No.2 in A.P.No.78/2022 and respondent No.3 in
A.P.No.49/2022 was respondent No.3 in A.C.No.23/2019.
Respondent No.1 in both A.P.No.49/2022 and A.P.No.78/2022 was
claimant in A.C.No.23/2019.
6 A.P.No.49/2022
& A.P.No.78/2022
5. Earlier A.P.No.49/2022 was pending before X Addl.
City Civil & Sessions Judge, Bengaluru (CCH-26). By virtue of the
order of the Hon'ble Prl. City Civil & Sessions Judge, Bengaluru, in
Misc.No.402/2023 dated 11.07.2023, A.P.No.49/2022 transferred to
this Court.
6. Summary of the parties is as under: Claimant M/s.
TATA Consultancy Service Limited, is an Indian Multinational
Information Technology (IT) and is consulting services Company
having headquartered at Mumbai, Maharashtra. The claimant is
now placed among the most valuable IT services brands
worldwide, including its services in Bengaluru. The claimant has
stated that it is world's 4th largest IT services provider and as on
2017, the claimant company has ranked 10th on the Fortune India
500 list having its market capital at Rs.6,79,332.81 crore in Bombay
Stock Exchange and it has about 4,17,929 employees as on
December 2018.
6a) The respondent No.1 claims to be a part of Salarpuria
Sattva Group and founded in 1986. The respondent No.1 is a real
estate developer having commenced its business in Bengaluru, in
1993 carrying on the business of residential apartments,
residences, commercial spaces, IT parks, shopping malls school
and further intending to expend its ventures such as in Aerospace.
Respondent No.1 is involved in real estate activities with own or
leased properties and it is also buying, selling, renting and
operating of self-owned or leased real estate, also the development
and sale of the land.
7 A.P.No.49/2022
& A.P.No.78/2022
6b) Respondent No.2 is a private limited company
incorporated on 07.03.2007, involved in the building of complete
construction or part thereof as well as civil engineering. As per the
claimant, the respondent No.2 is primarily in the business of land
banking and respondent No.2 claimed that, it is in the process of
acquiring large extent of land in Tubarahalli and Siddapura Villages
of Vartur Hobli, Bengaluru as an aggregator.
6c) The respondent No.3 was represented to be a Group
Company of the respondent No1. The respondent No.3 is a Limited
Liability Partnership Firm and it is registered with Registrar of
Companies, Mumbai.
7. As per the claimant, they were desirous of
consolidating and expanding its operations in Bengaluru, Karnataka
by setting up SEZ Campus of its own in Bengaluru City. In 2011,
the claimant had about 29000 employees operating from various
facilities in Bengaluru and the demand from its customers for
setting up its projects in Bengaluru, the Bengaluru being the IT Hub
of India, was growing rapidly and therefore, the claimant had
decided to acquire sizable land, in and around Whitefield,
Bengaluru to set up a Special Economic Zone (SEZ). As per then
prevailing standards set by the Government of India, a minimum
area of 25 acres was required for the purpose of setting up SEZ.
Therefore, the claimant was looking for land in excess of 25 acres
in and around Whitefield, Bengaluru, for setting up its campus. The
claimant had contacted with all the respondents to acquire total
8 A.P.No.49/2022
& A.P.No.78/2022
extent of 27 acres 10 guntas of land in various survey numbers of
Tubarahalli and Siddapura Vellage of Varthur Hobli, Bengaluru
East. As per the claimant, each of the respondents had specific
obligations to perform under the said contract. The respondent
No.1 was required to ensure the performance of the obligation of
each of the respondents and all the payment for the acquisition of
the land was agreed to be paid to the respondent No.1.
7a) The claimant had engaged the services of a consultant
Sri.Preeth Hegde, based in Bengaluru to assist the claimant with
the task of identification and sourcing of the land in the vicinity of
Whitefiled, Bengaluru. Sri. Preeth Hegde was acquainted with the
respondent No.1 and on becoming aware of the mandate provided
to Sri.Preeth Hegde, the respondent No.1 had approached
Sri.Preeth Hegde, through its Directors, who offered to procure land
required by the claimant and it was indicated that, an extent of 35
acres of land in Tubarahalli and Siddapura villages of Varthur Hobli,
Bengaluru East Taluk near Whitefield, Bengaluru, was immediately
available and the said land was suitable for the claimant's
business. It was also represented to the claimant that, the
respondent No.1 through its aggregator has entered into necessary
arrangements to acquire an extent of about 100 Acres of land
including the said extent of 35 acres. It has been stated by the
claimant that, post such approval of the location of the land, the
respondent No.1 provided the final price offer for the sale of the
schedule property in favour of the claimant and after series of
meeting, the cost of the land per acre was fixed at Rs.7,17,00,000/-
per acre and a Memorandum of Understanding was entered into
9 A.P.No.49/2022
& A.P.No.78/2022
between the claimant and the respondent No.1 on 15.07.2011. As
per the Memorandum of Understanding, the respondent No.1 had
agreed to convey an extent of 35 acres in favour of the claimant.
On the terms and conditions mentioned therein.
7b) The respondent No.1 thereafter introduced the
claimant to the respondent No.2 and represented that, respondent
No.2 had already acquired and was in the process of acquiring
large parcel of land in and around Whitefield, Bengaluru and it was
also informed to the claimant that, the respondent No.3 is the
Group Company of respondent No.1 and has entered into
agreement with respondent No.2 for acquiring about 35 acres of
land out of the larger parcel, which the respondent No.2 acquired or
was in the process of acquiring in and around Whitefield,
Bengaluru. The respondent No.1 represented that, respondent
No.2 has already acquired either directly in its name or in its
nominee's name, an extent of 11 acres and is in the process of
acquiring additional 24 acres of the land amongst other lands in the
same area. It was also represented that, the consideration in part
for the acquisition of extent of 35 acres was already paid by
respondent No.3 to respondent No.2 and the respondent No.1 had
agreed to pay on its own the remaining agreed consideration for
the purchase of the said land to the extent of 35 acres to
respondent No.2. Respondent No.1 had represented to the
claimant that, it has necessary title and authority to sell 35 acres of
land in favour of the claimant. Therefore, the claimant started work
on the Agreement to Sell. Memorandum of Understanding entered
into between the claimant and respondent No.1 in respect of the
10 A.P.No.49/2022
& A.P.No.78/2022
land to the extent of 35 acres. Post the execution of the
memorandum of understanding, the respondents offered to convey
in favour of the claimant in the 1 st phase an extent of 27 acres 10
guntas out of 35 acres agreed to be sold to the claimant. The
directors of respondent No.1 represented the claimant that, they
have almost acquired minimum required land (in excess of 25
acres for SEZ). Accordingly, the parties entered into an agreement
to sell on 02.11.2011 in respect of the schedule property i.e.,
Description of the schedule property is as under:
All that piece and parcel of the immovable properties being
the lands in Tubarahalli and Siddapura Villages of Varthur Hobli,
Bengaluru East Taluk, Bengaluru, as detailed hereunder in all in an
extent of 27 Acres and 10 Guntas.
Village Sy.No. Acre Gunta Karab
Tubarahalli 44/2 20 4
Tubarahalli 49/4 1 28 3
Tubarahalli 49/2 0 37 2
Tubarahalli 50/1 2 14
Tubarahalli 50/2 2 32
Siddapura 46/4 3 10 16
Siddapura 46/1 1 6
Siddapura 46/3 1 13
Siddapura 47 1 16 1
TOTAL-1 11 176 26
Tubarahalli 49/2 0 34
Siddapura 46/2 3 15 3
Siddapura 49/2 1 15 7
TOTAL-2 15 240 36
11 A.P.No.49/2022
& A.P.No.78/2022
Siddapura 46/5 0 2
Siddapura 46/6 0 6
Siddapura 46/7 0 5
Siddapura 46/8 0 2
Siddapura 48/1 1 6 1
Siddapura 48/2 0 9
Siddapura 48/3 0 20
Tubarahalli 49/1 2 12 3
Tubarahalli 49/3 1 28 2
TOTAL-3 4 90 6
TOTAL 1+2+3 19 330 42
27 10
ACRES GUNTAS
7c) Based on the representations, claimant applied for
permission based on the memorandum of understanding and even
prior to execution of the agreement to sell to the Karnataka Udyog
Mitra for permission to establish SEZ in the lands belong, the single
window agency of the Government of Karnataka. Bengaluru
Development Authority filed its response to the effect that, the land
contained in Tubarahalli village and Siddapura Village are being
identified for the purpose of a scheme for formation of layout of
residential sites titled as "Nadaprabhu Kempegowda Layout" and
the said proposal is pending approval at the hands of the State
Government and it was subject matter of Writ Petition instituted by
respondent No.2 before the Hon'ble High Court of Karnataka in
W.P.No.7357/2009 and W.P.No.22352/2009. Thereafter, the
respondent No.2 withdrawn the said writ petitions upon securing
the assurance from the Government that, the schedule property
12 A.P.No.49/2022
& A.P.No.78/2022
were being excluded from the purview of the schedule development
submitted by the BDA and based on the said representation, the
claimant proceeded to enter into the agreement to sell.
7d) At the time of execution of the agreement to sell, in
November 2011, the guideline value of the lands in the vicinity of
the schedule property was approximately Rs.2,00,00,000/-(two
crore) per acre but the claimant had agreed to purchase the said
land for Rs.7,17,00,000/- per acre i.e., approximately more than
350% of the guideline value i.e., for the total consideration of
Rs.195,38,25,000/-. It was agreed that, 30% of the total sale
consideration amount was to be paid as an advance amount to the
respondent No.1. Thereafter, 40% of the total sale price, totaling to
the extent of 70% of the total sale price was to be paid at the time
of the execution and registration of the sale deed and remaining
30% of the sale price was to be paid after securing necessary
changes in the land use under the provisions of Karnataka Town
and Country Planning Act, so as to enable the claimant to use the
property for commercial purposes/IT/ITES purposes.
7e) The cost of conversion of the change of use was also
to be borne by the respondents. Further, the respondents agreed to
provide a properly laid 80 feet wide access road from the main road
to the schedule property as shown in sketch of the plan Annexure-A
to the Agreement to Sell. The entire time frame for the execution
and registration of the Sale Deed of the extent of 27 Acres and 10
Guntas was to be completed on or before 30.11.2011. The change
of the usage was to be secured on or before 31.01.2012. The time
13 A.P.No.49/2022
& A.P.No.78/2022
frame fixed was based on the statement that, the lands are already
converted from the agricultural to non-agricultural purposes and
therefore fixed within 25 days of the Agreement to Sell.
7f) In view of the representations by the Respondents
that, the said lands would not be considered for the purpose of the
scheme of Development as propounded by the Bengaluru
Development Authority, the Claimant had agreed to release the first
payment of 30% i.e., Rs.58,61,47,500/- as agreed under the
agreement to sell subject to deposit of original title deeds to the
extent of 11 acres of land already acquired by Respondent No.2.
The title deeds of the land measuring 11 acres were handed over to
the counsel for the Claimant upon being handed over the cheque
bearing No.16092 dated 02.11.2011 drawn on Standard Chartered
Bank, Koramangala Branch, Bengaluru. Cheque was handed over
on 20.02.2012 and encashed by Respondent No. 1.
7g) After execution of the Agreement to sell, Claimant was
to be furnished further documents of title related to schedule
property, but the Respondent failed to do the same. Counsel for
the Claimant had prepared the draft Deed of Sale on 09.01.2012
and had provided to the Respondents. As per the Claimant, all the
title reports in respect of the 27 acres and 10 guntas of land were
submitted by the Respondents to the counsel for the Claimant even
prior to the Agreement to Sale being executed. Respondents took
no action to comply with the requirements of the contract either in
terms of measurement of the schedule property and completing the
transaction. Respondents had an obligation to ensure that, the
14 A.P.No.49/2022
& A.P.No.78/2022
transaction is completed within the time period agreed under the
Agreement to Sell. As per the various E-mail communications by
the Respondents to the Claimant, show that, the respondents were
delaying to honour their contractual commitments.
7h) As per the Claimant, it was in dire need for additional
space for the purpose of consolidating its existing business and
accommodating new project and therefore had intended to acquire
lands in the vicinity of Whitefield, Bengaluru and to save the rentals
being paid. As per the claimant, the schedule property was
targeted for acquisition of the value of Rs.195,38,25,000/- and the
total envisaged expense for the project was Rs.3,338,00,00,000/-
and the additional expenses under various heads were to be
incurred to operationalize the project. Due to the inordinate delay
by the respondents in performing contractual obligation under the
Agreement to sell, delayed the implementation of the project by the
Claimant resulting the Claimant to suffer and continue to suffer
huge losses under several heads. As per the Claimant, it is entitled
to specific performance of the contract by the Respondents. As
per the Claimant, it is entitled to be compensated for the losses
which has arisen naturally and in the course of events and the
Claimant has quantified the same in sum of Rs.451,10,00,000 in
addition to the refund of the amount paid together with the interest
thereon at 18% p.a. Due to lapse of time, in the said vicinity, value
of the land would have appreciated twice over last 8 years even on
a conservative estimate. The claimant has alleged that, the expert
commissioned by the claimant has assessed the quantification of
the losses suffered by the claimant at Rs.451.10 crores, if for any
15 A.P.No.49/2022
& A.P.No.78/2022
reason the specific performance of contract is not granted and in
the event of specific performance is granted, then the Claimant will
suffer the loss of Rs.345.70 crores as on 28.02.2019. The
claimant was always ready and willing to perform its part of the
contract and even as on today, it is ready and willing to perform his
part of contract. The only obligation on the part of the Claimant
was to pay balance sale consideration. As per the Claimant, the
reserves of the Claimant in the year 2011 in terms of the balance
sheet was Rs.22,500,15.94 crores.
7i) The Claimant issued the notice at the first instance on
25.05.2017 calling upon the respondents to comply with their
obligations under the agreement to sell, failing which, the Claimant
would be constrained to initiate appropriate legal proceedings for
specific performance of the agreement and damages at the cost
and consequences of the respondents. Thereafter, notice in terms
of Section 11 of the Arbitration and Conciliation Act, 1996 was
issued by nominating the arbitrator as the dispute was to be
arbitrated under Clause-13 of the agreement to sell. Ultimately, the
Claimant had filed CMP No.320/2017 before the Hon'ble High
Court of Karnataka. Initially, the Hon'ble High Court of Karnataka
had appointed an arbitrator but then the matter was carried before
Hon'ble Supreme Court by the Respondent no.3 and thereafter, the
appointed arbitrator had withdrawn from the arbitration and the
Claimant preferred another application for appointment of another
arbitrator and ultimately, vide order dated 23.11.2018, the present
Arbitral Tribunal has been constituted by the Hon'ble High Court of
Karnataka. The claimant filed the petition before the Arbitral
16 A.P.No.49/2022
& A.P.No.78/2022
Tribunal narrating its case, seeking the following prayers:
a. An award for Specific Performance directing the Respondents
to specifically perform their obligations under the Agreement
to Sell executed on 2.11.2011; and to execute and register
the Deed of Sale in respect of the Schedule Property in favour
of the Claimant by receiving the balance sale consideration of
Rs.136,76,77,500 (Rupees One Hundred Thirty Six Crores
Seventy Six Lakhs Seventy Seven Thousand Five Hundred
only) on the tranches as provided for under the Agreement
to Sell and subject to the compliance with the terms and
conditions thereof, and to deliver possession of the Schedule
Property to the Claimant failing which the Claimant be
entitled to execute the Award as a Decree of the Court and to
secure the Deed of Sale of the Schedule Property through the
process of the Court;
Note: The present relief is valued in a sum of Rs. 195,38,25,000/-
(Rupees One Hundred and Ninety-Five Crores Thirty-Eight
Lakhs Twenty Five Thousand Only),
b. An award directing the Respondents jointly and severally to
pay a sum of Rs.345,70,00,000/- (Rupees Three Hundred and
Forty Five Crores and Seventy Lakhs only) or such sum
determined by this Tribunal to the Claimants as damages
suffered by the Claimant as on the date of the presentation
of the claim statement resulting from the failure of the
Respondents to perform their contractual obligations under
the Agreement to Sell dated 02.11.2011 together with
current and future interest on the said sum at the rate of 18%
per annum to be calculated from the date of the claim till the
date of payment.
17 A.P.No.49/2022
& A.P.No.78/2022
Note:The present relief is valued in a sum of Rs.345,70,00,000/-
(Rupees Three Hundred and Forty Five Crores and Seventy
Lakhs only).
OR IN THE ALTERNATE TO PRAYER A AND B ABOVE
a. An award directing the Respondents to jointly and severally
to pay to the Claimant a sum of Rs.132,46,79,790/- (Rupees
One Hundred and Thirty Two Crores Forty Six Lakhs Seventy
Nine Thousand Seven Hundred and Ninety only) as on
21.02.2019, together with current and future interest on the
said sum of Rs.13246,79,790/- @ 18 percent per annum from
22.02.2019 till the date of payment;
Note:The present relief is valued in a sum of Rs. 132,46,79,790/-
(Rupees One Hundred and Thirty-Two Crores Forty-Six Lakhs
Seventy Nine Thousand Seven Hundred and Ninety Only).
b. An award directing the Respondents jointly and severally to
pay a sum of Rs.451,10,00,000/- (Rupees Four Hundred and
Fifty One Crores and Ten Lakhs only) or such sum determined
by this Tribunal to the Claimants as damages suffered by the
Claimant as on the date of the presentation of the claim
statement resulting from the failure of the Respondents to
perform their contractual obligations under the Agreement
to Sell dated 02.11.2011 together with current and future
interest on the said sum at the rate of 18% per annum to be
calculated from the date of the claim till the date of payment.
Note:The present relief is valued in a sum of Rs.451,10,00,000/-
(Rupees Four Hundred and Fifty-One Crores and Ten Lakhs
only).
AND IN ADDITION TO PRAYER A AND B THE FOLLOWING:
c. An award directing the Respondents to jointly and severally
pay additional damages to be determined by this Tribunal on
18 A.P.No.49/2022
& A.P.No.78/2022
accounts of losses that the Claimant would continue to suffer
from 1st March 2019 till the date of payment of awarded
damages in terms of prayer (b) above resulting from the
failure of the Respondents to perform their contractual
obligations under the Agreement to Sell dated 2.11.2011
together with current and future interest on the said sum at
the rate of 18% per annum to be calculated from the date of
the claim till the date of payment;
Note:The present relief is valued notionally in a sum of
Rs.1,00,000/- (Rupees One Lakh only) and to be finally
computed based on the Award;
d. An Award for the costs incurred by the Claimant on account
of the Agreement to Sell and the cost of the legal
proceedings in a sum of Rs.2,00,00,000/- (Rupees Two Crores
only).
Note:The present relief is valued notionally in a sum of
Rs.2,00,00,000/- (Rupees Two Cores only).
e. An Award in the nature of an Order of Perpetual Injunction
restraining the Respondents, their agents, servants executors,
assigns, administrators, legal heirs, legal representatives,
successors or any other person claiming through or under
them, from dealing with, disposing off or in any way
alienating the or creating any encumbrance whatsoever on
the schedule property;
Note:The present relief is valued notionally in a sum of Rs.1,00,000/-
(Rupees One Lakh only);
f. Pass an order as to costs of the present proceedings;
g. Pass such other order/s as this Hon'ble Court deems fit in the
circumstances of the case, in the interest of justice and
equity.
19 A.P.No.49/2022
& A.P.No.78/2022
8. In response to the claim petition, the respondents filed
their statement of objections.
8a) The respondent No.1 filed objections contending that,
the claim petition is liable to be dismissed in so far as Respondent
No.1 is concerned on the ground that, the respondent No.1 has not
breached any terms and conditions of the said agreement. The
Respondent No.2 had originally entered into MOU dated
09.04.2011 with M/s.Salarpuria High Raise Pvt. Ltd., (hereinafter
referred to as SHRPL) for the purpose of development of 104 acre
and 2 guntas of the land in various survey numbers of Siddapura
and Tubarahalli Villages of Varthur Hobli, Bengaluru East Taluk,
Bengaluru, under which it was the obligation of the Respondent
No.2 to acquire around 100 acres of land and the obligation of the
SHRPL was to develop the said land. Thereafter, supplemental
memorandum of understanding dated 01.07.2011 was entered into
between Respondent No.2 and SHRPL under which SHRPL had
permitted Respondent No.2 to sell through the Respondent No.1 an
extent of 35 acres of the land to the claimant which was part of 104
acres and 2 guntas in the earlier memorandum of understanding
dated 09.04.2011. Thereafter, the respondent No.2 entered into
MOU with Respondent No.3 on 01.07.2011, under which,
Respondent No.3 had agreed to purchase the said 35 acres of the
land at a consideration of Rs.4.5 crore per acre subject to the terms
and conditions including that the Respondent No.2 had to make out
a marketable title within a period of 5 months from the date thereof.
Thereafter, on 1.07.2011 itself respondent No.1 entered into MOU
with the Respondent No.3 agreeing to purchase the above stated
20 A.P.No.49/2022
& A.P.No.78/2022
35 acres of the land for a sum of Rs.6.5 crore per acre subject to
the terms and conditions stipulated therein. The respondent No.1
had paid the sum of Rs.96 crores to Respondent No.3 under the
said MOU dated 01.07.2011. During the period of 09.08.2011 to
23.02.2013, Respondent No.3 had paid a sum of Rs.95 crore to the
Respondent No.2. Respondent No.2, out of the monies received
from the respondent No.1 continued to procure the properties in
question. As per the respondent No.1, the respondent No.2 had
already mortgaged some of the properties to 3 entities namely, L&T
Finance Limited, L&T Infrastructure Company Limited and L&T
Housing Finance Limited, by way of deposit of title deeds through a
document dated 18.09.2017 in the name and style of memorandum
of entry.
8b) Subsequent to entering into MOU dated 15.07.2011
with the claimant agreeing to sell the above referred 35 acres of
land for a sum of Rs.7.17 crore per acre, the transaction was to be
completed within a period of 7 months from the date of MOU.
Subsequently, respondents entered into Agreement to Sell dated
02.11.2011 with claimant keeping in mind MOU dated 01.07.2011
entered into between respondent No.2 & 3 and MOU dated
01.07.2011 entered into between respondent Nos.3 and 1 and the
MOU dated 15.07.2011 entered into between Respondent Nos.1
and the claimant. The claimant was to purchase 27 acres and 10
guntas of the Schedule Property for a total sum of Rs.
195,38,25,000/- at the rate of Rs.7.17 crore per acre, which the
claimant was to pay to Respondent No.1. The claimant had issued
the cheque dated 02.11.2011, which was released on 20.02.2012
21 A.P.No.49/2022
& A.P.No.78/2022
being 30% of the said amount i.e., Rs.58,61,47,500/-. The said
amount was received by Respondent No.1 for and on behalf of
Respondent Nos.2 and 3. As per respondent No.1, obligation of
securing 27 acres 10 guntas of Schedule Property in favour of the
claimant was that of respondent No.2. On 20.02.2012, Respondent
No.1 had already paid a total sum of Rs.96 crores to Respondent
No.3, who in turn paid a sum of Rs.95 crores to Respondent No.2.
It was the obligation of Respondent No.2 to make out a clear and
marketable title of the Schedule Property to enable conveyance in
favour of the claimant and it was for the claimant to purchase the
same from Respondent No.2. Even though, it was not the
obligation of the Respondent No.1 with regard to change of land
use, in order to expedite the sale of the property between the
Claimant and Respondent Nos.2. Respondent No. 1 was
coordinating with the concerned authority, Claimant and R2, to
safeguard the amounts being paid pursuant to the agreement.
Respondent Nos.1 & 2 had expressed their willingness to place the
original documents in Escrow and pursuant thereto, the counsel for
the Claimant, vide email dated 18.10.2011, had addressed to the
Claimant and the copy was forwarded to respondent No.1, wherein,
the terms of Escrow were enumerated and it was stated that the
original title deeds would be held by Sri.S.V.Giridhar, counsel for
the Claimant in Escrow and the original documents would be
forwarded to the Claimant only upon the execution and registration
of sale deeds in favour of the Claimant.
8c) In compliance with the terms and conditions of
Escrow, Respondent No.2 had addressed a letter dated 20.02.2012
22 A.P.No.49/2022
& A.P.No.78/2022
to Respondent No.1 and handed over original title documents and
other documents in respect of an extent of 11 acre 20 guntas
pertaining to the schedule property and the same was duly
acknowledged by Respondent No.1 and the Escrow agent. Upon
deposit of original title documents and other documents with the
consent of Respondent No.2 and having received the cheque from
Escrow Agent, Respondent No.1 had addressed email dated
21.02.2012 confirming the same to Respondent No.2. On
28.01.2014, the Claimant addressed a letter to the Escrow agent
marking a copy to all the Respondents referencing the deposit of
title deeds by Respondent No.1 and requested that necessary
arrangements be made for release of title deeds to the custody of
the Claimant. Respondent no.2 had replied to the said
communication vide letter dated 31.01.2014 wherein, it
acknowledged that, the title deeds were deposited with Escrow
agent and requested the Escrow agent not to release the title
deeds to the Claimant. Respondent No.2 was all along aware of
the deposit of title documents and therefore did not raise any
objection in its reply dated 01.09.2017 to the legal notice dated
25.05.2017 issued by the Claimant.
8d) Even though, the Claimant and the Respondent
entered into said agreement, as the transaction was not being
completed, Respondent No.2 had also offered alternative lands by
means of email dated 21.10.2013 and 28.08.2014 for the property
situated at Varthur village for two different parcels of the land
admeasuring 31 acres 3 guntas and 40 acres 34 guntas
respectively. Respondents had also offered certain other
23 A.P.No.49/2022
& A.P.No.78/2022
alternative lands to the Claimant by means of email dated
29.10.2015 and 26.02.2016. It is contended by Respondent No.1
that, the contract so far as was concerned being a contingent
contract, the performance of contract namely specific performance
or any other obligations under the contract as against Respondent
No.1 would not arise. Question of holding Respondent No.1 as
jointly and severally liable does not arise. Respondent No.1 has
not specifically given guarantee for the transaction to go through
between Respondent No.2 and Claimant. The Claimant is
estopped from claiming relief against Respondent No.1 much less
to fasten the liability jointly and severally.
8e) Respondent No.2 has failed in procuring the schedule
property within time stipulated as mentioned in the agreement.
Responsibility was casted upon Respondent No.2 to perform its
obligations under agreement and Respondent No.1 had limited or
no role to play in furtherance to the said agreement. Respondent all
along from the time of entering into agreement made its best efforts
to conclude the said agreement and receive the full consideration in
the light of the fact that, it has in turn made payment to Respondent
No.2 through respondent No.3 to procure lands. There is no cause
of action that has arisen to make any adverse claim against
Respondent No.1 in terms of the said agreement.
8f) It is contended that, in the light of the failure of the
respondent No.2 to procure the lands and on account of its non-
performance, the respondent No.1 has not only suffered loss, but
also lost some of the business opportunities and suffered damages.
24 A.P.No.49/2022
& A.P.No.78/2022
It is fit case to grant specific performance, but the claimant cannot
claim the claims against Respondent No.1. The damages claimed
by the claimant at Rs.451,10,00,000/- is without any basis. It is
contended that, if the claimant is claiming after paying
Rs.58,61,41,500/- from Feb 2012, Respondent No.1 who paid
Rs.96 cores would be entitled double the amount as compensation
from what the claimant has paid due to the action of the claimant
and Respondent No.2 and the said amount of Rs.96 crores was
paid by Respondent No.1 between 2011 to February 2013.
Respondent No1 prayed to dismiss the petition.
9. Respondent No.2 has filed statement of defence as
well as counter claim. Respondent No.2 stated that, the main
objective of the company is to carry on the business to invest in
properties and to act as builders, promoters, consultants and
developers of land in residential and commercial buildings and
sites. Respondent No.2 submitted the proposal to the State High
Level Clearance Committee (SHLCC) to establish Integrated
Township comprising of Info-tech Park, Hardware Park and
Residential Condominiums and Common facilities in 120 acres of
land at Tubarahalli and Siddapur Villages, Varthur Hobli, Bengaluru
East Taluk with an investment of Rs.1560 crores. Respondent No.3
had expressed interest in purchasing land ad-measuring 35 acres
situated at Tubarahalli and Siddapura village, Varthur Hobli, which
were part of Integrated Township Project. Respondent Nos.2 and 3
entered into Memorandum of Understanding dated 01.07.2011
setting out the broad terms and conditions on the basis of which
any prospective transactions would have been concluded between
25 A.P.No.49/2022
& A.P.No.78/2022
the parties. On the same day, Respondent No.3 had entered into a
Memorandum of Understanding with R1 whereby Respondent No.3
agreed to sell all the lands purchased from Respondent No.2 to
Respondent No.1.
9a) The claimant and the respondents had entered into an
Agreement to Sell dated 02.11.2011. In view of various MOUs, the
respondents agreed to convey 27 acres and 10 guntas of land as
described in the schedule to the agreement. As per Clause-3 of the
Agreement to Sell, execution and registration of the Sale Deed was
to be completed on or before 30.11.2011 and the necessary
changes in the land use under the Karnataka Town and Country
Planning Act, 1961 was to be completed by 30.01.2012. The
respondents were not the absolute owners of the Schedule
Property, but were in the process of procuring various lands by
execution of sale deeds from the respective owners in relation to the
schedule properties. Respondent No.2 had made sincere attempts
to acquire schedule properties so as to discharge its obligations
under the Agreement to Sell. Respondent No.2 had demonstrated
the highest degree of good faith towards the claimant by
undertaking actions stipulated in the Agreement to Sell.
Respondent No.2 had managed to obtain ownership of 25 acres 10
guntas of schedule property for the claimant's project of SEZ by
26.06.2013. The landowners of the remaining portions of schedule
properties refused to part with their land parcels, as the claimant
after obtaining consent of the High Level Clearance Committee,
failed to maintain confidentiality which resulted in various news
items in relation to setting up of the project being published in the
26 A.P.No.49/2022
& A.P.No.78/2022
various local and national dailies. When the land owners came to
know about this, they saw as an opportunity and refused to sell their
properties at any cost. Respondent No.2 had assured Respondent
No.1 that, the title in possession of 25 acres 10 guntas of schedule
property would be conveyed by the end of August 2013 and it had
also assured Respondent No.1 that, proper access will be provided
to the schedule property, but it was made clear that, the acquisition
of land beyond this extent was not possible. As per Respondent
No.2, the claimant needed 25 acres on its project and the same was
available. As per Respondent No.2, owing to the fact that, the
claimant disclosed the execution of its project without consent of
Respondent No.2, value of the land in and around area went up
dramatically and land owners who had agreed to sell their properties
refused to sell. This resulted into scenario where the larger project
of the R2 also suffered grave harm and became impossible of
achievement. There was no response forthcoming neither from
Respondent No.1 nor from claimant for alternative lands for
execution of SEZ project to the e-mail of respondent No.2 dated
26.06.2013.
9b) The Managing Director of Respondent No.2 had
offered for alternate lands for execution of SEZ project by the
claimant at Varthur Hobli. As per Respondent No.2, in the
meanwhile, the claimant vide letter dated 28.01.2014 called upon
Sri. Giridhar to handover title deeds of the schedule property to the
extent of 11 acres and 35 guntas on the ground that, the
respondents had purportedly failed to fulfill their obligations under
the agreement to sell. Respondent No.2 vide its letter dated
27 A.P.No.49/2022
& A.P.No.78/2022
31.01.2014 requested Sri. Giridhar, Advocate not to part with the
title deeds of the schedule property. On 28.08.2014, Sri. Kumar
Babu made another proposal to the claimant offering to sell 40
acres 34 guntas of land of which 34 acres was already registered in
its name and another 6.34 acres was in the process of being
acquired. Claimant was taken no action in this regard. Therefore,
it shows that, the claimant had no interest in the schedule property
or in acting on the agreement to sell. The respondent No.2 learnt
from the reliable sources that, the claimant took a decision not to
set up any project, therefore the claimant had lost all interest in
acquiring any land.
9c) On receipt of legal notice dated 25.05.2017, the
respondent No.2, vide its letter dated 01.09.2017, sent a detailed
response rebutting the false and malicious accusations made by
the claimant in its legal notice dated 25.5.2017. Respondent No.2
had clarified that, non-performance of Agreement to Sell was either
due to events beyond the control of the parties or due to faults
solely attributable to the claimant. There was no response from the
claimant to the offer to provide alternative land. Claim of the
claimant is barred by time and cannot be adjudicated by the
Tribunal. Agreement to sell dated 2.11.2011 become unenforceable
against respondent No.2. As per the respondent No.2, the claimant
was required to enforce the terms of the Agreement to sell within a
period of 3 years from the date fixed for performance of the
agreement i.e., upto 30.01.2015. Notice dated 18.09.2017 was
issued by the claimant after more than 5 years after the date fixed
for performance of obligations under the Agreement to Sell. The
28 A.P.No.49/2022
& A.P.No.78/2022
respondent No.2 is only liable for refund of the amount received
under the Agreement to sell, if the claim is within the period of
limitation. Claimant in breach of the said obligation disclosed the
information relating to the execution of the SEZ well before the
acquisition of lands, due to which, respondent No.2 was prevented
from discharging its obligations. Hence, respondent No.2 cannot
be held liable to any loss occurred to the claimant. All the claims of
the claimant for resultant losses and damages are barred by
contract and liable to be dismissed.
9d) As per Respondent No.2, it had proposed the
establishment of Integrated Township comprising of Info-tech Park
Hardware Park, residential Condominiums and common facilities in
120 acres of land at Tubarahalli and Siddapur Villages, Varthur
Hobli, Bengaluru East Taluk with an investment of Rs. 1560 Crores.
In view of the publicity regarding the project of the claimant resulted
in rise of value of lands in and around the schedule property
exponentially, which resulted the respondent No.2 unviable.
Therefore, the claimant is liable to pay damages on account of its
breaches and inability to maintain confidentiality and therefore,
respondent No.2 claimed that claimant is liable to pay a sum of Rs.
100 crores. Further, respondent No.1 is liable to compensate for
wrongful loss caused to Respondent No.2 and Respondent No.1 is
liable to pay a sum of Rs.25 crores. The respondent No.1 was duty
bound to return all the title deeds and other related documents in
relation to the schedule property to the respondent No.2 soon after
the agreement to sell did not crystallize between the parties owing
to the fault of the claimant. This respondent No.2 in the counter
29 A.P.No.49/2022
& A.P.No.78/2022
claim prayed as under:
a) DIRECT: The Claimant to pay Respondent No.2 a sum of
Rs.100,00,00,000/- (Rupees One Hundred Crores) towards
Counter Claim No.1; pendente-lite and future interest at the
rate of 18% per annum till the date of payment awarded by
this Arbitral Tribunal;
b) DIRECT: Respondent No.1 to return all the title deeds and
other related documents in relation to the schedule property
furnished along with letter dated 20.02.2012 in terms of the
list which forms part of the said letter dated 20.02.2012;
c) DIRECT: Respondent No.1 to pay a sum of Rs.25,00,00,000/-
(Rupees Twenty Five Crores) to respondent No.2 for
wrongfully withholding title deeds and other documents in
relation to the Schedule Property;
d) DIRECT: The Claimant to pay a sum of Rs.1,00,00,000/-
(Rupees One Crore) to Respondent No.2 towards the
administrative and legal expenses incurred as a result of the
present frivolous and vexatious claim.
10. The respondent No.3 has filed separate statement of
objections to the claim petition contending that, the claim petition is
not maintainable either in law or on facts. It is contended that,
respondent No.3 had entered into MOU dated 01.07.2011 with
respondent No.2 to purchase an extent of 35 acres of land situated
at Tubarahalli and Siddapura Villages of Varthur Hobli, Bengaluru
East Taluk. On the same day, the respondent No.1 had entered
into MOU with respondent No.3 agreeing to purchase said 35 acres
of land. The claimant and respondents thereafter entered into
agreement to sell dated 02.11.2011. Respondent No.3 had
received an amount of Rs.96,00,00,000/- from the respondent
No.1. It had paid a sum of Rs.95,00,00,000/- to respondent No.2 to
30 A.P.No.49/2022
& A.P.No.78/2022
purchase the said lands. Respondent No.3 agreed to assign all its
right, title and interest in the schedule property to the respondent
No.1. Respondent No.3 contended that, it is neither the owner nor
is obligated under the agreement to sell to transfer any claim
schedule lands in favour of the claimant. Hence, question of
seeking any specific performance or damages against the
respondent No.3 do not arise. The respondent No.3 further adopt
and relied the statement of objections filed by respondent No.1 and
respondent No.3 prayed to dismiss the claim against it.
11. In response to the statement of objections of
respondent Nos.1, 2 & 3, the claimant filed rejoinder to the
statement of objection of respondent No.1 as well as respondent
No.2 and also to the statement of objection of respondent No.3
denying all the allegations made in the objections except to the
extent admitted specifically. Respondent No.1 filed response to the
counter claim of respondent No.2.
12. On the pleadings of the parties, the Arbitral Tribunal
has framed the following:
ISSUES
1. Whether the claimant proves that Memorandum of
Understanding dated 15.07.2011 was entered between the
Claimant and the respondent No.1 upon the representations
and the circumstances as alleged in para Nos.14 and 15 of
the claim petition ?
2. Whether the claimant proves that the agreement to sell
dated 02.11.2011 was made upon the representations made
by the respondents as alleged in para Nos.22(a) and 22(p)
of the claim petition ?
31 A.P.No.49/2022
& A.P.No.78/2022
3. Whether the claimant proves that the Claimant was ready
and willing to perform the contract as per agreement to sell
dated 02.11.2011 ?
4. Whether the Claimant proves that the respondents failed
and neglected to perform their obligations of the contract as
per the agreement to sell dated 02.11.2011 ?
5. Whether the claimant proves that the claimant is entitled to
seek specific performance of the contract as per the
Agreement to Sell dated 02.11.2017 ? and if yes, in the
manner as prayed ?
6. Whether the respondent No.1 proves that, considering the
subject matter of contract as per the agreement to sell dated
02.11.2011 and its action, respondent No.1 cannot be made
liable for specific performance nor damages, if any, to the
claimant ?
7. Whether the respondent No.2 proves that, the agreement to
sell dated 02.11.2011 is unenforceable due to circumstances
as alleged in para 22 and para 30 of its statement of
objections ?
8. Whether the respondent No.2 proves that, it cannot be held
responsible for the losses that occurred to the claimant
(which claims as per the respondent No.2 are also false) on
account of agreement not fructifying between the parties ?
9. Whether the respondent No.3 proves that, it is neither
owner nor it obliged under the agreement to sell dated
02.11.2011 to transfer the subject land to the claimant and /
or therefore any specific performance or damages cannot be
claimed for the claimant from the respondent No.3 ?
10. Whether the claimant proves that, the claimant has suffered
the damages of Rs.345.70 crores or any other amount due
to failure of the respondents to perform their obligations of
the contract as per agreement to sell dated 02.11.2011 ?
11. Whether the claimant proves that it is entitled to recover
Rs.132,47,79,790/- and Rs.451.10 crores from the
respondents jointly and severally in lieu of specific
performance of contract as per agreement dated 02.11.2011
and in lieu of the damages suffered by the claimant of
Rs.345.70 crores or any other amount referred to in issue
No.10 ?
32 A.P.No.49/2022
& A.P.No.78/2022
12. Whether the claimant proves that claimant is entitled to
recover Rs.2 crores or any other amount from the
respondents towards cost incurred on account of
Agreement to Sell and cost of legal proceedings ?
13. Whether the respondent No.2 proves that respondent No.2
is entitled to recover Rs.100 crore or any other amount
from the claimant towards damages as alleged in para 94 of
the counter claim and / or Rs.1 crore towards legal and
administrative fees incurred by the respondent No.2 alleged
in para 99 of the counter claim ?
14. Whether claim of the claimant and / or counter claim of the
respondent No.2 is /are barred by limitation and if yes, to
what extent ?
15. Whether the claimant proves that it is entitled to an order of
injunction restraining the respondents, their agents,
servants, executors, assignees, administrators, legal heirs,
legal representatives, successors or any other person
claiming through or under them, from dealing with,
disposing of or in any way alienating or encumbrance
whatsoever on the schedule property ?
16. Whether the claimant proves that it is entitled to additional
damages as prayed in para No.J(c) of the claim petition ?
17. What could be the rate of interest per annum as pendent-
lite-in the event of any of the claims of the claimant or
counter claim of respondent No.2 is / are in part / full found
proved and / or to be granted ?
18. What final award for final reliefs and cost / s?
13. On behalf of the claimant, Sri.Col.K.A.Chinnappa
(Retd.) examined as PW.1 and another witness Sri.Navin Vohra
examined as PW.2 and got marked documents at Ex.C.1 to
Ex.C.179. PWs.1 & 2 are subjected to cross-examination by the
respondents. On behalf of the respondents, they did not lead any
oral evidence, but tendered documentary evidence in support of
their case and documents have been marked as per Ex.R.1/1 to
Ex.R.1/22, Ex.R.2/1 to Ex.R.2/27 and Ex.R.3/1 to Ex.R.3/4.
33 A.P.No.49/2022
& A.P.No.78/2022
14. After closure of the evidence of the claimant, on behalf
of the respondents, two witnesses filed their affidavits in lieu of their
examination in chief and examined as RW.1 and RW.2, but Rws.1
& 2 withdrawn their evidence affidavits and submitted that, they
have no evidence except the documents marked.
15. After hearing both the sides, the Arbitral Tribunal has
passed the following:
AWARD
1.
The claimant is entitled to specific performance of the part of
the contract limited for the parcels of the land, total
admeasuring 18 acres and 39 ½ guntas (as per the details
shown in the schedule mentioned at para 301 of the present
award) in the manner as observed and directed herein after.
1(a) The claimant is entitled to get the registered Sale Deed
executed in its favour and to get the actual physical possession
of the aforesaid land, both, from the respondents against the
sale consideration at the rate of Rs.4.224 crores (Rs.5.019
crores for the land minus Rs.0.795 crores for the road) per
acre, but on actual payment of Rs.21.588 crores (Rs.4.224
crores multiplied by 18 acres 39 ½ guntas - Rs.80.203 crores
minus Rs.58.615 crores advance money already paid) with the
expenses of stamp duty, registration, etc., without there being
right of access to properly laid down 80 ft, wide road as
mentioned in the subject Agreement to Sell.
1(b) The claimant is entitled to acquire from the respondents by
execution of the documents in writing as per law, the right of
access through a properly laid down 80 ft. wide, common
road, from the aforesaid land to the main road (as per the
subject agreement) within period of 2 months from the date of
execution of the registered Sale Deed in favour of the claimant
as per earlier direction, against the payment of consideration
34 A.P.No.49/2022
& A.P.No.78/2022
of Rs.0.795 crores (being 15.84% of Rs.5.019 crores for the
land) per acre, total Rs.15.095 crores (Rs.0.795 crores
multiplied by 18 acres 39 ½ guntas) and the expenses of stamp
duty, registration etc., if any.
1(c) It is further observed and directed that in the event the
respondents fail to provide aforesaid 80 ft. wide road to the
main road as per the earlier direction, then in that case, the
claimant would be entitled to recover compensation as
damages from the respondents jointly and / or severally, in lieu
of non-availability of the aforesaid road, at the rate of Rs.0.430
crores (being 15.84% of Rs.2.716 crores which is 70% of
Rs.3.88 crores) per acre, total Rs.8.164 crores (Rs.0.430 crores
multiplied by 18 acres 39 ½ guntas) and the claimant shall also
be entitled to make arrangement for the access road from the
aforesaid land to the main road at the cost of claimant.
1(d) The claimant is entitled to receive from the respondents, the
permission / sanction order of the competent authority for the
change of use of the aforesaid land from the agriculture to
commercial/industrial/IT-ITES purposes, within period of 4
months from the date of execution of the registered Sale Deed
as per the earlier direction against the payment of
consideration at the rate of Rs.2.151 crores (30% of Rs.7.17
crores) per acre, total Rs.40.842 crores (Rs.2.151 crores
multiplied by 18 acres 39 ½ guntas)
1(e) It is further observed and directed that if the respondents fail
to provide aforesaid permission / sanction order of the
competent authority for the change of use within the aforesaid
period as per the earlier direction, then in that case, the
claimant would be entitled to recover compensation as
damages of Rs.1.164 crores (30% of Rs.3.88 crores) per acre,
total Rs.22.101 crores (Rs.1.164 crores multiplied by 18 acres
and 39 ½ guntas) from the respondents jointly and/or severally
and the claimant shall also be entitled to get the
permission/sanction from the competent authority for change
of use of the aforesaid land from agricultural to commercial /
industrial /IT-ITES purposes at the cost of the claimant.
35 A.P.No.49/2022
& A.P.No.78/2022
1.1 It is observed and clarified that the aforesaid directions (1(a) to
1(e) are issued on the basis that the actual area on site of the
aforesaid parcels of the land in total is of 18 acres 39 ½ guntas,
but in the event, upon actual measurement such area is found
as less, then the aforesaid respective amount in rupees in the
respective directions shall proportionately get reduced and
consequently the respective directions shall remain enforceable
accordingly.
1.2 An injunction is granted restraining the respondents including
respondent No.2, their agents and/or servants from
transferring or alienating or creating any right in any manner
whatsoever, in possession or title or interest, of any person
whomsoever, in the aforesaid land admeasuring 18 acres 39 ½
guntas, until the registered sale deed is executed and the
possession is handed over of the said land by the respondents
to the claimant as per earlier direction at para 1(a).
2. The claimant is entitled to recover compensation as damages
from the respondents jointly and/or severally for the land
admeasuring 8 acres and 29 ½ guntas (27 acres and 10 guntas
minus 18 acres and 39 ½ guntas) at the rate of Rs.3.88 crores
(Rs.11.05 crores minus Rs.7.17 crores) per acre, total Rs.33.901
crores (Rs.3.88 crores mutiplied by 8 acres and 29 ½ guntas)
with interest at the sime rate of 12% p.a. from 11 th March 2019
(the date on which the statement of claim is filed till the date of
the award.
3. It is further observed and directed that, the claimant shall be
entitled to recover from the respondents jointly and / or
severally interest at the simple rate of 12% p.a. from 11.3.2019
till the date of the award on the aforesaid amount of
compensation as damages as per earlier direction 1(c) and/or
1(e), if both or any of the aforesaid amount of compensation as
damages become/s recoverable fully or proportionately.
4. The counter-claims by the respondent No.2 against claimant
are not granted and dismissed.
5. The claimant is entitled to recover from the respondents jointly
and/or severally all costs towards arbitrator fees, Centre
administrative charges, travel, transportation, conveyance,
36 A.P.No.49/2022
& A.P.No.78/2022
food, accommodation expenses and other expenses including
cost of paper advertisement as per the order of the Arbitral
Tribunal, but subject to verification thereof by the officials of
the Arbitration Centre.
6. The claimant is entitled to recover from the respondents jointly
and / or severally Rs.6,00,000/- towards cost of legal fees and
expenses of the present arbitration.
7. The claimant is entitled to recover from the respondents jointly
and / or severally the interest at the simple rate of 12% p.a. on
the aforesaid awarded amount as per earlier direction at
Sl.No.2, 3, 4, 5 and 6 herein above from the date of the award
until the actual realization thereof.
8. The other reliefs claimed by the claimant are not granted.
16. Being aggrieved by the award, respondent No.2 /
petitioner in A.P.No.49/2022 has challenged the award contending
that, the petitioner and the respondents entered into an agreement
to sell dated 02.11.2011. Under the said agreement to sell, the
petitioner and the respondent Nos.2 and 3 (hereinafter collectively
'vendors') agreed to convey an extent of 27 acres 10 guntas of land
as described in the schedule to the agreement, to the respondent
No.1. The vendors agreed to transfer the schedule property to the
respondent No.1 for a total consideration of Rs.195,38,25,000/-
payable in three tranches - Rs.58,61,47,500/- (i.e., 30% of the total
consideration) at the time of execution of the agreement to sell, the
balance consideration of 40% and 30% at the time of registration of
the sale deed and conversion of land respectively. It is an admitted
fact between the parties that, Rs.58,61,47,500/- was paid by the
respondent No.1 to the respondent No.2 after the execution of the
agreement to sell. Further, clause-3 of the agreement to sell
37 A.P.No.49/2022
& A.P.No.78/2022
stipulated that, the execution and registration of the sale deed was
to be completed on or before 30.11.2011 and the necessary
change in land use under the Karnataka Town and Country
Planning Act, 1961 was to be completed by 31.01.2012. The
recitals to the agreement to sell made it amply clear that, the
vendors were not the absolute owners of the schedule property, but
were in the process of procuring said lands by execution of the sale
deeds from the respective owners. Therefore, from the very
beginning, the respondent No.1/claimant was aware that, the
vendors were not the absolute owners of the schedule property.
The petitioner made sincere attempts to acquire the schedule
properties so as to discharge its obligations under the agreement to
sell. However, owing to the landowners refusing to part with their
lands, the petitioner was only able to acquire 25 acres 10 guntas of
schedule property. On 26.06.2013, the petitioner clearly
communicated its inability to acquire additional land to the
respondent No.1 and other vendors. There was no response
forthcoming from the respondents, making it apparent that, they
were no longer interested in pursuing the transaction. The
respondent No.1 also claimed that, there was a breach of contract
in January 2014 and intended to initiate legal proceedings against
the respondents and the petitioner.
17. The petitioner has further submitted that, the
Managing director of the petitioner offered alternative lands to the
respondent No.1/claimant for the purpose of IT / ITES Project at
Varthur Hobli, Bengaluru in 2013-14. These were part of a
completely different transaction and had nothing to do with the
38 A.P.No.49/2022
& A.P.No.78/2022
agreement to sell. The representative of the respondent Nos.1 and
2 actively inspected these lands and impressed upon the Managing
Director of the petitioner that, they were seriously considering the
new transactions. The terms, consideration and properties, which
were subject matter of those discussions were completely different
from the subject matter of the agreement to sell and were
unconnected to the present transaction under the agreement to
sell. However, no response was forthcoming from the respondent
No.1 as they had lost all interest in acquiring any lands in
Bengaluru. When the things stood thus, on 25.05.2017 (more than
4 years later, the petitioner was shocked to receive a legal notice
from the respondent No.1/claimant interalia demanding specific
performance of the agreement to sell within 15 days of the receipt
of the notice. The petitioner responded to the notice on 01.09.2017
and rebutted all the false and concocted claims made against it.
18. The impugned award suffers from several legal and
factual infirmities and patent illegalities, is opposed to public policy
and deserves to be set aside. In paragraphs 185 to 187 of the
impugned award, arbitral tribunal held that, liability of the petitioner,
respondent Nos.2 & 3 (vendors) under the agreement to sell to
convey schedule properties to the respondent No.1 was joint and
several. Thereafter, in paragraphs 188 to 205 of the Arbitral Award
rejected the contention of the petitioner, respondent Nos.2 & 3 that,
it had become impossible for performance of the agreement to sell
owing to the landowners refusing to sell their land parcels in the
schedule property.
39 A.P.No.49/2022
& A.P.No.78/2022
19. The superior Courts in India have consistently taken a
view that, a partly seeking specific performance of an agreement is
required to prove readiness and willingness to perform the
agreement from the date of execution of the agreement till the date
of filing the suit / claim petition seeking specific performance of the
agreement. In the instant case, the arbitral tribunal committed a
patent illegality in concluding that, the respondent No.1 / claimant
was ready and willing to perform the agreement to sell by ignoring
vital evidence and making findings based on "no evidence".
20. No correspondence in relation to schedule property
after 26.09.2013 (Ex.C.165) till the date of issuance of legal notice
on 25.05.2017 (Ex.C.177): The agreement to sell was executed by
the parties on 02.11.2011. In terms of the said agreement, the
petitioner, the respondent Nos.2 and 3 (i.e., vendors) were required
to convey the schedule property to the respondent No.1 (i.e.,
purchaser) on or before 30.11.2011 and secure necessary change
in land use on or before 31.01.2012. For reasons beyond the
control of the petitioner, it was unable to complete the transactions
by the said dates.
21. There were several correspondences exchanged
between the parties regarding the various ways in which the
transaction could be closed at the earliest. Despite best efforts, the
petitioner was only able to secure 25 acres 10 guntas of the
schedule property for conveyance to the respondent No.1. Further,
the petitioner made it abundantly clear that, it will not be in a
position to secure any further land parcels described in the
40 A.P.No.49/2022
& A.P.No.78/2022
schedule property since land owners refused to part with their
lands. All these aspects were communicated to the respondent
No.2 on 26.06.2013 and the respondent No.2 forwarded this
communication to the respondent No.1 on 28.06.2013 (Ex.C178).
For reasons best known to respondent No.1, it did not even
respond to the petitioner's proposal to transfer 25 acres 10 guntas
of the schedule property (i.e., admeasuring 27 acres 10 guntas) by
August 2013. Thereafter, on 26.09.2013 (Ex.C.165), the
respondent No.1 called upon the vendors to complete balance
acquisition of the schedule property to proceed with the transaction.
This is the last correspondence in which the claimant / respondent
No.1 evinced any interest in purchasing the schedule property.
22. From 26.09.2013 till issuance of the legal notice on
25.05.2017 (EX.C177), the respondent No.1 considered several
proposals for alternative lands from the petitioner, the respondent
Nos.2 and 3. On 14.02.2014 (Ex.R1/21), the petitioner offered to
convey 16 acres of alternative lands to the respondent No.1, but
did not take any steps in relation to the agreement to sell nor did it
make any communication in respect thereof. The respondent
No.1/claimant requested the petitioner to await decision of its
management. Thereafter, the respondent No.1/claimant also
actively considered alternative proposals for lands submitted by the
petitioner on 21.10.2013 (Ex.C.168) and the respondent No.2
(Ex.C.170). All these alternative proposals were considered in lieu
of the schedule property that was to be transferred to the
respondent No.1 under the agreement to sell. Therefore, from a
conspicuous reading of all these correspondences will demonstrate
41 A.P.No.49/2022
& A.P.No.78/2022
that, the respondent No.1 lost all interest in conveyance of the
schedule property under the agreement to sell starting from
26.09.2013 (Ex.C.165).
23. The Arbitral Tribunal ignored vital evidence by failing to
consider Ex.R.1/21 and Ex.C.168 that conclusively proved that,
claimant / R1 had abandoned the transaction of the schedule
property under the agreement to sell. Thus, necessarily, 1st
respondent was not "ready and willing" to perform the agreement to
sell from the date of execution of the agreement to sell till the date
of filing of the claim petition. In paragraph 214 of the impugned
award, the Arbitral Tribunal summarily dismissed these vital
documents on the specious ground that "such offers were without
prejudice to the rights and contents of the agreement". This is a
finding without any evidence whatsoever. At no point was it urged
or contended that these letters were issued without prejudice to the
rights and contents of the agreement. There is no explanation as
to why 1st respondent did not even consider it necessary to raise
any claim with respect to the agreement to sell or make a demand
for performance. The fact remains that, 1st respondent had no
interest in performance of the agreement. There is not even a
single correspondence on record to corroborate the fact that, such
liberty was indeed reserved by 1st respondent while considering
alternative proposals in lieu of the schedule property. Finding
made by the Hon'ble Arbitrator that offers were without prejudice is
contrary to the evidence, based on no evidence, whatsoever and is
clearly unsustainable. An award which is made without considering
the evidence on record and a finding based on no evidence is
42 A.P.No.49/2022
& A.P.No.78/2022
clearly opposed to the fundamental policy of Indian Law and is
opposed to public policy. Hence, the impugned award is contrary
to public policy and deserves to be set aside.
24. The Arbitral Tribunal was duty bound to consider
whether the respondent No.1 was ready and willing to perform the
contract throughout the period from the date of the agreement to
sell till the date of initiation of proceedings and till the passing of the
award. The Tribunal does not make any finding on readiness and
willingness all through. It would be well-nigh impossible to make
such a finding when since September 2013, there is not even a
single correspondence making any demand for any of the
properties, which are subject matter of the agreement to sell. This
crucial fact will demonstrate the absence of readiness and
willingness. To ignore this crucial fact is to ignore the settled law
relating to specific performance which has resulted in a patently
illegal award.
25. The Arbitral Tribunal concluded that the respondent
No.1 was "willing" to perform the agreement to sell on "no
evidence": It is settled law in India that, the claimant has to
necessarily step into the witness box and give evidence regarding
his readiness and willingness to perform the agreement. However,
where the entire transaction has been conducted through power of
attorney holder / authorised representative, the principal has to
examine the said attorney to prove readiness and willingness, and
not any subsequent or different power of attorney holder /
authorised representative. If there are different power of attorney
43 A.P.No.49/2022
& A.P.No.78/2022
holder / authorised representative at different stages of the
transaction, then, in order to prove "readiness and willingness", the
law requires all of them to be examined to prove the case of the
claimant / R1. In support of its case, the purchaser / 1 st respondent
tendered Col. Chinnappa as Claimant witness No.1. In his
evidence affidavit tendered in lieu of examination in chief,
Mr.Chinnappa (CW.1) holds himself out of as the Senior General
Manager of the Claimant / R1. In paragraph 110 of his deposition,
CW.1 states that, Board of Directors and Management of the
Claimant / respondent No.1 had taken the decision to enter into the
agreement to sell. Furthermore, CW.1 admits that, he was not part
of the Management and it comprised of the CEO Mr.Chandra
Shekharan, CFO - Mr.Mahalingam and Mr.Nagaraj ijari, Bengaluru
Central Head. Additionally, CW.1 further admits that, negotiations
for the subject transaction have been conducted by Mr.Madhav
Anchan and Mr.Nagaraj Ijari. Furthermore, in paragraph 96 of the
deposition, he admits that, Mr.Madhav Anchna liasoned with
Mr.Preeth Hegde regarding the subject transaction. Most
importantly, in paragraph 111 of the deposition, CW.1 admits that,
all the actions relating to the subject transaction are based on
instructions given by Mr.Madhav Anchan / Mr.Nagaraj Ijari.
Therefore, it is abundantly clear that, the decision to continue /
discontinue was being taken by Mr.Madhav Anchan and the top
level management. CW.1 was not part of the decision making
process and merely acted as a post office. Hence, the authorised
representative / power of attorney holder who was competent to
depose regarding the readiness and willingness of the claimant /
R1 were Mr.Madhav Anchan and other members of the top level
44 A.P.No.49/2022
& A.P.No.78/2022
management. Therefore, given the fact that, Mr.Madhav Anchan
has not been tendered as a witness by the 1 st respondent and been
subjected to cross-examination on the issue, R1 / purchaser failed
to prove that, it was willing to perform the agreement.
26. In fact, in paragraph 207 of the impugned award, the
Arbitral Tribunal acknowledges that, there is substance in the
contention of the petitoner that, Mr.Madhav Anchan and Mr.Nagaraj
Ijari should have been examined to prove the willingness of
respondent No.1 to perform the agreement to sell. It is clear that,
CW.1 did not have any knowledge with respect to willingness of the
respondent No.1 as that was a matter entirely within the knowledge
of the management of the respondent No.1 and it was also
admitted that, CW.1 was not part of such discussions nor was he
part of the management. Despite that compelling fact to ignore the
evidence of the respondent No.1, the Arbitral Tribunal proceeds to
conclude that that respondent No.1 was ready and willing to
perform the agreement to sell based on the hearsay evidence of
Col.Channappa. A finding based on hearsay evidence is a finding
based on 'no evidence' and therefore, the impugned award is
contrary to public policy and deserves to be set aside. It is a
fundamental policy of Indian Law that, evidence of readiness and
willingness is absolutely essential in any proceeding seeking
specific performance. Such readiness and willingness must be
established by cogent evidence. Readiness and willingness to
perform, if dependent on the will of certain persons who are part of
the management of the company can only be proved by the
evidence of those persons. Col. Chinnappa was admittedly not
45 A.P.No.49/2022
& A.P.No.78/2022
part of the management of the respondent No.1 and could not
plead or lead evidence on the intention of the management of the
respondent No.1. Consequently, the award which recognizes that
the evidence of the witness tendered by the defendant No.1 does
not satisfy the minimum requirements of law and yet upholds
readiness and willingness cannot be sustained on any ground
whatsoever. Violation of the fundamental policy of Indian Law is
writ large in the award. The award is patently illegal.
27. Expiry of the Government approval for setting up
special economic zone: The respondent No.1 / purchaser had
obtained approval of the State High level clearance committee on
13.02.2012 (Ex.C133 - page 659 to 661 - Col.2) to set up a
Special Economic Zone on the schedule property. In paragraph
5.26 of the Expert Report furnished by the respondent No.1 /
purchaser (EX.C.178), the respondent No.1 / purchaser admits
that, the approval was not extended and had lapsed. In paragraph
216 of the impugned award, the Arbitral Tribunal disregarded this
vital evidence as a factor in considering whether the respondent
No.1 / purchaser was ready and willing to perform the agreement to
sell. It is undisputed that, the agreement to sell was entered into
with the intention of carrying out the project of a Special Economic
Zone. The same required the consent of the State Level Clearance
Committee under the Karnataka Industries Facilitation Act. Such
permission was granted for a certain period only. The permission
expired. It was permissible for the respondent No.1, if it were
interest in the agreement to sell to obtain extension of the
permission. It did not take any steps in that direction. This meant
46 A.P.No.49/2022
& A.P.No.78/2022
that, it had no interest in the acquisition of the properties. The fact
that such a vital clearance was not extended by the respondent
No.1 clearly establishes that, the intention of the respondent No.1
was not to perform the agreement. To ignore the same and to hold
that, the respondent No.1 continued to be willing to perform the
contract is a case where the Tribunal has ignored without
justification vital evidence on record to arrive at a finding of
readiness and willingness. Such finding is contrary to public policy
of India and fundamental policy of Indian Law. The award is clearly
and patently illegal and cannot be sustained.
28. The Arbitral Tribunal has ignored the contract and has
proceeded to pass an award contrary to the agreement to sell. The
tribunal has failed to notice the fact that, the claimant was not the
owner of the entire extent of land and was in the process of
acquisition of land from various third parties and this knowledge
was crucial to the case of the respondent No.1. Being aware of
these facts, the Tribunal could not have drawn the conclusions that
it has in this award. The fact that, the due diligence on title was
also done prior to the entering into of the agreement was a
significant factor which demonstrated complete knowledge in all
matters involving the respondent No.1 and consequently, 1 st
respondent was well aware of all risks involved in the said process.
29. Part-performance of the agreement to sell: In
paragraph 256 to 301 of the impugned award, the arbitral tribunal
summarily rejected the contentions of the respondent. Thereafter,
the arbitral tribunal held that 18 acres 39.5 guntas of the schedule
47 A.P.No.49/2022
& A.P.No.78/2022
property was available for conveyance to the respondent No.1 /
purchaser and accordingly ordered part-performance of the
agreement to sell.
30. Consideration to be paid for obtaining part-
performance of the agreement to sell: In paragraph 302 of the
impugned award, the arbitral tribunal proceeded to compute the
consideration to be paid by the respondent No.1 / Purchaser for
obtaining part-performance of the agreement to sell. The arbitral
tribunal arbitrarily held that 70% of the total consideration to be paid
under the agreement to sell was for purchase of the unconverted
lands and the balance 30% of the total consideration under the
agreement to sell was towards change in land use. Since the total
consideration for acquisition of the schedule property under the
agreement to sell after change in land use was Rs.7,17,00,000/-
per acre, the arbitral tribunal held that the cost of obtaining the
schedule property was Rs.5.019 crore per acre (i.e., 70% of
Rs.7.17 crores). Thereafter, strangely, the arbitral tribunal adverted
to the letter dated 18.02.2014 (Ex.R1/21) and concluded that
15.84% of the total consideration of Rs.5.019 crore per acre (i.e.,
0.795 Crores) was towards provision of the access road to the
schedule property. Hence, the Arbitral Tribunal held that actual
cost of schedule property without change in land use and after
deducting the amount payable towards acquisition of the access
road was 4.224 crores (Rs.5.019 crores - 0.795 crores).
Consequently, the cost of conversion under the agreement to sell
towards change in land use and other charges was Rs.2.151 crores
per acre (i.e., Rs.7.17 crore - Rs.5.019).
48 A.P.No.49/2022
& A.P.No.78/2022
31. The award of part-performance of the agreement to
sell is contrary to public policy and deserves to be set aside: In the
claim petition, the claimant / respondent No.1 sought for specific
performance of the agreement to sell, failing which, the respondent
No.1 / Claimant sought refund of Rs.58,61,47,500/- paid at the time
of the execution of the agreement to sell along with 18% per annum
from 31.01.2012 till 22.02.2019. Additionally, the respondent No.1 /
claimant also sought future interest at the rate of 18% per annum
from 22.02.2019 till realisation of sums. Further, a perusal of
pleadings of the respondent No.1 / claimant in paragraph 41 and 42
of the claim petition will also make it abundantly clear that, the
respondent No.1 / claimant never sought part-performance of the
agreement to sell.
32. The findings of the arbitral tribunal awarding part
performance of the agreement to sell are contrary to the most basic
notions of justice and fundamental policy of Indian law since claims
not sought by the respondent No.1 / claimant in the claim petition
have been awarded vide the impugned award. At no point in time
did the respondent No.1 seek part-performance of the agreement
to sell. Instead, it prayed for complete refund of the advance sums
paid to the vendors. Hence, the impugned award is contrary to
public policy and deserves to be set aside.
33. That apart, the Arbitral tribunal has committed a patent
illegality by granting part-performance of the agreement to sell by
adverting to Sec.12 (4) of the Specific Relief Act, 1963. The said
49 A.P.No.49/2022
& A.P.No.78/2022
provision will only come into force if the agreement to sell could be
segregated into parts. Further, the said provision stipulates that one
part of the agreement should be independent and separate from the
other part that cannot or ought not to specifically performed. In the
instant case, it is not the respondent No.1's case that it was open to
purchasing the schedule property if it was segregated into several
parts. This is obvious from a mere perusal of clause-VII of the
agreement to sell, which stipulates that schedule property was a
portion of 35 acres of land that was proposed to be acquired by the
respondent No.1 / claimant for setting up its facility. Hence, arbitral
tribunal has acted contrary to Section 28 of the Arbitration and
Conciliation Act, 1996, by failing to even take into account the
prevailing statutory law in force. Thus, the impugned award is
contrary to public policy and deserves to be set aside.
34. It is also necessary to point out that, the power of the
Court to grant partial performance of a contract is also dependent
on whether a party wants specific performance. If a particular party
does not want specific performance of a portion of the contract, the
same cannot be compelled. This becomes obvious when the 1 st
respondent in its application under Section 33 has made it clear
that, it is not interested in partial performance of the agreement to
sell, but simply states that the tribunal has exercised its discretion.
This has also been recorded in the order dated 29.12.2021 where
the Tribunal notices that, respondent No.1 did not make any request
for partial performance. When the respondent No.1 has not made
any demand for partial performance and their claim itself has always
been for the entire contract or nothing at all, the tribunal could not
50 A.P.No.49/2022
& A.P.No.78/2022
have passed an award for partial performance of the agreement to
sell. Such an award which does not even put the petitioner on
notice that such an award is proposed by the tribunal runs contrary
to all notions of justice and morality and is absolutely opposed to
fundamental principles of Indian law other than being violative of
principles of natural justice and Section 18 of the Act.
35. Most importantly, the superior courts in India have
taken a view that a party that has refused part-performance of a
contract on an earlier occasion is disentitled from seeking / being
awarded part - performance of the agreement to sell. Hence, the
impugned award is contrary to public policy and deserves to be set
aside. It is an admitted fact that, on 26.06.2013, the petitioner
whilst stating that, it is not possible to provide land in excess of
about 25 acres offered the same to the respondent No.1, who
rejected the request. CW.1 clearly admits at page 34 of the cross-
examination that, in terms of the said email, it was made clear that,
the petitioner was in a position to acquire in all 25 acres 10 guntas
of land. Once partial performance of the contract was offered by
the petitioner and refused by the respondent No.1, there is no
question of awarding part performance. The tribunal failed to
examine this legal position and clearly violated a fundamental
policy of Indian law.
36. A holistic reading of an agreement to sell makes it
abundantly clear that, the agreement to sell envisaged only two
outcomes - the vendors convey the schedule property to the
respondent No.1 or the vendors refund the advance consideration
51 A.P.No.49/2022
& A.P.No.78/2022
paid by the respondent No.1 towards purchase of the schedule
property. Findings of the arbitral tribunal awarding part performance
of the agreement to sell is not even a plausible view possible based
on the terms of the agreement to sell. Hence, the impugned award
is contrary to public policy and deserves to be set aside.
37. The computation of consideration for conveyance of
18 acres 39.5 guntas of the schedule property is dehors the terms
of the agreement to sell and deserves to be set aside: Clause 2 of
the agreement to sell merely stipulated the time for payment of
consideration by respondent No.1 for purchase of the schedule
property. Under the said clause, 30% of the sale consideration
(i.e., 58,61,47,500) was paid vide cheque dated 02.11.2011 to the
respondent No.2. 40% of the total sale consideration (i.e.,
Rs.78,15,00,000/-) was to be paid at the time of execution of sale
deed and the balance 30% of the total consideration (i.e.,
58,61,47,500/-) was to be paid after the vendors secured change in
land use. There is no basis in the agreement to sell for the absurd
interpretation placed by the arbitral tribunal. This is not even the
case of the respondent No.1. This is not the case of any of the
parties. The Tribunal has re-written the contract entirely at its own
whim. The view of the arbitral tribunal is not a plausible view. The
tribunal has passed an award contrary to the agreement between
the parties and consequently the award cannot be sustained. The
award is clearly opposed to the fundamental policy of Indian law
and is patently illegal. Therefore, the findings of the arbitral tribunal
are contrary to public policy and deserve to be set aside.
52 A.P.No.49/2022
& A.P.No.78/2022
38. That apart, the arbitral Tribunal adverts to the recitals
in the agreement to sell and concludes that, the vendors were
under an obligation to provide an access road of less than 80 feet
wide and "right of access" had to be conveyed to the respondent
No.1. Based on this recital, the Arbitral Tribunal concluded that, the
total consideration of Rs.195,38,25,000/- also included the cost of
road. This finding is contrary to the terms of the agreement to sell.
There is no cost fixed for the road to be provided.
39. In order to compute the cost of acquisition of the road,
the Arbitral Tribunal adverted to letter dated 18.02.2014 (Ex.R.1/21)
and arbitrarily held that, the cost of the road is 15.84% of the total
cost of acquisition. In the said letter, the petitioner offered to
convey 16 acres of lands at the rate of Rs.8,50,00,000/- per acre
and provide an additional extent of land to be used as a road at the
rate of Rs.1,60,00,000/- per acre as a fresh transaction wholly
divorced from the transaction contemplated under the agreement to
sell. In order to arrive at the cost of acquisition of road, the Arbitral
Tribunal has erroneously presumed that, the value of the land and
road per acre is Rs.10,10,00,000/- and thereafter concluded that
total cost of acquisition of road is 15.84% since the petitioner
offered to make road available at the rate of Rs.1,60,00,000/- per
acre (i.e., 1,60,00,000/ 10,10,00,000) -(100) - 15.84%). A mere
perusal of the letter makes it abundantly clear that, the cost of
acquisition was not Rs.10,10,00,000/- per acre, but only
Rs.8,50,00,000/- per acre. Moreover, the said sums pertained to
entirely separate transaction and was proposed in February 2014,
more than 2 years after execution of the agreement to sell. Hence,
53 A.P.No.49/2022
& A.P.No.78/2022
it is obvious that the arbitral tribunal grievously erred in assigning
15.84% of the total consideration for acquisition of the land towards
the cost of the road based on the offer made in the letter dated
18.02.2014 (Ex.R.1/21). The findings of the arbitral tribunal are in
fact based on 'no pleading', 'no evidence', but surmises,
conjectures and prejudices of the arbitral tribunal. Hence, the
impugned award is contrary to public policy and deserves to be set
aside. Moreover, when the terms of the agreement to sell itself
does not envisage such bifurcation of consideration, the Arbitral
Tribunal has clearly acted in excess of its jurisdiction by reading
into the agreement to sell such non-existent and acting wholly
contrary to Section 28 (3) of the Arbitration and Conciliation Act,
1996. Hence, the impugned award deserves to be set aside.
40. In addition to the above, on issues of this kind, in the
absence of pleading or evidence, the petitioner is completely taken
by surprise when an arbitral award proceeds to make findings and
calculations contrary to the agreement, the pleadings and evidence
led by the parties and arguments advanced. When an arbitral
award is so made, the same is completely and absolutely in
violation of principles of natural justice and cannot be sustained.
The award proceeds on various assumptions and presumptions to
the detriment of a party and does not put a party to notice of the
differing method adopted to compute the consideration (wholly
contrary to the agreement) and thus, violates every known tenet of
law. An award which is contrary to the principles of natural justice
cannot be sustained. The award is also clearly hit by Sec.18 of the
Arbitration and Conciliation Act, 1996 and deserves to be set aside.
54 A.P.No.49/2022
& A.P.No.78/2022
41. The claimant's entire case was for the entire extent of
land and not for a portion thereof. When the claimant has not
made a claim for partial performance, the tribunal could not have
awarded a portion of the claim. Such a partial performance award
contrary to the intention of the parties as well as the pleading and
evidence and the terms of the contract violates the fundamental
policy of Indian law, is opposed to public policy, is patently illegal
and violates natural justice in that the petitioner is not put on notice
that, the tribunal would consider a claim of partial performance.
There is no issue framed with respect to partial performance.
There is no prayer for partial performance. The pleading in the
Section 33 application also makes it clear that there was no case of
partial performance but that the tribunal has of its own volition
proceeded to pass an award. As a matter of fact in terms of
Section 34 of the Act, if the tribunal has made an award with
respect to claims or a portion of the claim that is not referred to
arbitration, the award would have to be set aside. The tribunal in
considering partial performance has violated Section 18 of the
Arbitration and Conciliation Act, 1996 in that the petitioner has not
been granted an opportunity to put forth its case.
42. The Tribunal has ignored the fact that, the petitioner is
in no position to perform the agreement to sell as various portions
of the property are not owned by the petitioner and other persons,
who are not parties to the agreement to sell are the actual owners
of the properties. The tribunal has directed specific performance
of a contract, even partially when it is clear that the same cannot be
55 A.P.No.49/2022
& A.P.No.78/2022
performed. Such a conclusion drawn without examining the
material on record makes it evident that, the award cannot be
sustained in law. Issue No.6 has been answered by the Tribunal
contrary to the evidence on record, the pleadings, the agreement
and on the ipse dixit of the tribunal, which makes it evident that, the
same is contrary to the public policy of India and is patently illegal.
The issues 6 and 7 have been answered in a patently illegal
manner and cannot be sustained on any count. Similarly, issue 9
cannot be sustained for similar grounds. Given the fact that, the
findings on specific performance have been answered by the
tribunal contrary to public policy, contrary to the fundamental policy
of Indian law and in a patently illegal manner the claims for losses
on account of agreement not fructifying between the parties cannot
be sustained in law. Issue No.8 is as well answered in a patently
illegal manner by the tribunal.
43. In paragraphs 319 and 320 of the impugned award,
the arbitral Tribunal acknowledges the fact that the agreement to
sell had fixed 31.01.2012 as the date for completion of the
transaction. But, thereafter, the arbitral tribunal absurdly adverts to
the fact that the cheque towards 30% of the sale consideration was
handed over by the respondent No.1 to the vendors on 22.01.2012
i.e., much after the date fixed for performance of the agreement to
sell and concludes that no date was fixed for performance of the
agreement to sell. This finding is patently illegal as even if there is
payment made subsequently the fact that there is a date for
performance of the agreement to sell does not change or alter
automatically. At best the payment can only extend the period of
56 A.P.No.49/2022
& A.P.No.78/2022
limitation from that date. The fact that, there is a date fixed for
performance makes it abundantly clear that limitation for the
purposes of the Limitation Act has to be calculated from that date.
Calculated from that date, all claims are clearly beyond limitation.
44. The petitioner sought dismissal of the claims of the
respondent No.1 before the arbitral tribunal on the ground that, the
respondent No.1 fail to initiate arbitration within 3 years from the
date of refusal of the petitioner to specifically perform the
agreement to sell. In relation to this contention, the Arbitral tribunal
recorded its findings in paragraphs 320 to 325 of the impugned
award. The arbitral tribunal noted that, in the email dated
26.06.2013 (Ex.C178 / Vol.9 / 2574 -2576), the petitioner had made
it abundantly clear that, it had acquired 25 acres 10 guntas of land,
but was not in a position to acquire any further lands. Further, the
arbitral tribunal noted that the petitioner demanded enhanced
consideration of Rs.11,00,00,000/- per acre as fresh consideration
for conveyance of the lands instead of Rs.7,17,00,000/- per acre
agreed under the agreement to sell. After adverting to these
aspects, the arbitral tribunal absurdly concluded that, the counter
offer of the petitioner does not amount to "refusal" to perform the
agreement to sell. Consequently, the arbitral tribunal summarily
dismissed the defence of limitation raised by the petitioner.
45. The Arbitral Tribunal has also summarily dismissed the
contention of the petitioner that, it communicated its refusal to
perform the agreement to sell on 18.02.2014 (EX.R1/21). In the
said letter, the petitioner offered to give alternative lands ad
57 A.P.No.49/2022
& A.P.No.78/2022
measuring 16 acres of land at the rate of Rs.8,50,00,000/- per acre
along with access road at the rate of Rs.1,50,00,000/- per acre. Yet
again, the Arbitral Tribunal absurdly concluded that, the petitioner
had not "refused" to specifically perform the agreement to sell, but
merely demanded enhanced sums for performance of the
agreement to sell. Suffice, it is to state that, the findings of the
Arbitral Tribunal defy all principles of logic.
46. Additionally, in paragraph 322 of the impugned award
notes the letter email dated 14.03.2014 (Ex.R1/15) issued by the
respondent No.1's counsel to the petitioner and other vendors. In
the said letter, respondent No.1 candidly states that, it appears that,
the vendors do not intend to specifically perform the agreement to
sell. However, despite categorical evidence that the respondent
No.1 had notice of refusal to perform the agreement to sell, the
tribunal ignores the contents of the said letter and absurdly
concludes that all was well between the parties even after such
categorical admission from vendors to specifically perform the
agreement to sell. Thereafter, it adverts to the contents of the legal
notice dated 25.05.2017 and paragraph 32 of the CW-1's affidavit
to absurdly infer that meetings continued until issuance of the legal
notice on 25.05.2017. Based on these stray communications and
assertions of the claimant witness No.1 in the affidavit, the Arbitral
Tribunal concludes that there was no refusal to perform the
agreement to sell.
47. It is contended that, the statute of limitation is founded
on public policy, its aim being to secure peace in the community, to
58 A.P.No.49/2022
& A.P.No.78/2022
suppress fraud and perjury, to quicken diligence and to prevent
oppression. The statute of limitation is based on high principles of
public policy that long dormant claims have more of cruelty than
justice in them, that a respondent might have lost the evidence to
disprove the claim, and that the persons with good causes of
actions should pursue them with reasonable diligence. Hence, any
findings in the arbitral Tribunal contrary to the limitation Act, 1963
are contrary to public policy and the impugned award will have to
be set aside.
48. The impugned award is wholly contrary to Article 54 of
the Limitation Act, 1963 and hence, deserves to be set aside.
Article 54 of the Limitation Act, 1963 stipulates that, when date is
fixed for performance of the contract, the period of limitation is
three years from such date. It is only when no date is fixed for
performance of the agreement / contract that the limitation would
begin when the claimant / respondent No.1 had notice of the
refusal to perform the agreement to sell.
49. The Arbitral Tribunal has passed the impugned award
ignoring Clause 3 of the Agreement to sell and Article 54 of the
Limitation Act. Clause 3 of the agreement to sell expressly fixed
the date for performance of the agreement to sell on 31.01.2012.
Moreover, clause 14.6.1 of the agreement to sell stipulated that any
amendment or change to the agreement to sell could only be in
writing. It is also an admitted position between all the parties to the
agreement to sell that there has been no amendment or change to
the agreement to sell altering the date fixed for performance of the
59 A.P.No.49/2022
& A.P.No.78/2022
agreement to sell. It is also an admitted position between the
parties that the notice of arbitration position between the parties
that the notice September 2017 (Ex. C177- Page 2180-2186-
Volume 8). Here, viewed in light of this backdrop, it is crystal clear
that, any claim seeking specific performance of the Agreement to
sell had to be lodged on or before 30 January 2015. Given the fact
that the notice of arbitration was dispatched on 18.09.2017, the
claim of the 1st Respondent was hopelessly barred by limitation and
ought to have been rejected in toto. The Arbitral Tribunal committed
a patent illegality by ignoring the provisions of the Limitation Act
and the terms of the Agreement to Sell when it held that no date
was fixed for performance of the Agreement to Sell. This finding of
the Arbitral Tribunal ignores vital evidence and contrary to the terms
of the agreement to sell. Hence, the impugned Award is contrary to
public policy and deserves to be set aside.
50. The Arbitral Tribunal has ignored other vital evidence
and has not even adverted to the contentions of the petitioner while
considering the aspect of limitation. The respondent No.1 had
commissioned an expert report from Claimant Witness No.2 to
compute the quantum of damages suffered as a result of alleged
breach of the agreement to sell. In paragraph 1.11 of the Report
(Ex.C.178, Volumn 9, Page 2439), the respondent No.1 has
specifically instructed the expert that, the date of breach of the
agreement to sell is 31.01.2012. This is corroborated by the
Claimant witness No.2 in paragraph 6 of his deposition in cross-
examination.
60 A.P.No.49/2022
& A.P.No.78/2022
51. It is further contended that, in paragraph 27 of the
claim statement and paragraph 22(d) of the evidence affidavit of
the Claimant Witness No.1, there is categorical admission that the
date of breach of the agreement to sell is 31.01.2012. Hence, even
the claimant / respondent No.1 reckoned 31.01.2012 as the date
fixed for the performance of the agreement to sell. The Arbitral
Tribunal has conveniently ignored these admissions and passed
the impugned award contrary the public policy of India. Hence, the
impugned award deserves to be set aside. When the claimant
itself has taken a position on the date of breach, the limitation
period has to be reckoned from the date of breach and
consequently, the claim would be barred by limitation. The Tribunal
has strangely ignored the pleadings and evidence on record and
has arrived at a finding contrary to the pleadings and evidence on
its own analysis which cannot be sustained in law. Such a finding,
it is trite is patently illegal and contrary to the fundamental policy of
India law. That apart, there is no whisper in the Impugned Award
regarding the contentions of the Petitioner that the claims towards
damages and the refund of advance consideration being time-
barred under the Limitation Act. All these contentions were
specifically pleaded before the Arbitral Tribunal and also detailed in
the written arguments at paragraphs 63 to 78 of the written
arguments. Since the Impugned Award has not even adverted to
those aspects, it is but natural that no reasons have been assigned
for rejecting the contentions of the Petitioner. Therefore, the
Impugned Award does not assign any reasons and is contrary to
public policy and deserves to be set aside. The Award is therefore
contrary to Section 31 as there are no reasons to reject the
61 A.P.No.49/2022
& A.P.No.78/2022
contentions of the Petitioner and the reasons assigned are so
unintelligible that they do not amount to reasons at all. In addition,
the Award which does not deal with a contention specifically raised
violates natural justice and cannot be sustained.
52. The Arbitral Tribunal rejected the contention of the
Petitioner that it refused to perform the Agreement to Sell vide
email dated 26.06.2013 (Ex.C178 - Page No. 2574 to 2576 Volume
9) on the wholly specious ground that the Petitioner intended to
continue with the transaction, but with higher price consideration
being paid per acre. If a higher consideration is sought, it is trite
that the Petitioner has no intention of performing the contract in its
form. If that is not refusal to perform, one fails to understand as to
what else will be refusal. Refusal need not always be express; if the
circumstances surrounding it shows refusal that is sufficient. As a
matter of fact, the witness CW-1 himself admits in relation to Ex.
C178 as follows: "I am aware that as per the said email respondent
no. 2 (Petitioner herein) had made it clear that it was in a position to
acquire in all 25 Acres 10 Guntas of land".
53. A reading of the said email will make it obvious that
the Petitioner informed the Respondent No.1 that it had acquired
25 Acres 10 Guntas of land and was not in a position to acquire
further lands. Additionally, the Petitioner demanded a higher sale
consideration of Rs.11 Crores per acre. A reading of the said
email makes it obvious that the Petitioner refused to specifically
perform the Agreement to Sell and instead offered to convey 25
Acres 10 Guntas of land for higher consideration of Rs.11 crore per
62 A.P.No.49/2022
& A.P.No.78/2022
acre by August 2013. Thus, the Petitioner "refused to perform the
Agreement to Sell vide email dated 26.06.2013. The email dated
26.062013 (Ex.C178- Page 2574 to 2576-Volume 9) is nothing but
refusal of the Petitioner to perform the Agreement to Sell. The
Respondent No.1 had notice of the refusal to perform the
agreement to sell from 28.06.2013. Hence, any claim seeking
specific performance of the agreement to sell had to be filed on or
before 27.06.2016 i.e., 3 years from the date of refusal of the
agreement to sell. There are no reasons worth its name to justify
the findings made. The findings are specious and cannot be
sustained. Reasons are absent, so also the reasons stated are
unintelligible and insufficient. The case law cited has not been
examined in its proper perspective and therefore, the award
violates every policy of Indian Law. Hence, the impugned Award is
contrary to public policy and deserves to be set aside.
54. The Arbitral Tribunal ignored the letter dated
28.01.2014 (Ex.R.1/13 at page 358 of the respondent No.1's
statement of objections) and paragraph 105 of the deposition of
claimant witness No.1, wherein, the respondent No.1 itself states
that, vendors have failed to perform the agreement to sell. Thus,
even if limitation is reckoned from the said date, the claims of the
respondent No.1 before the Arbitral Tribunal are hopelessly time
barred. Hence, the impugned award is contrary to public policy and
deserves to be set aside. The Tribunal with a view to bring the
claims within limitation has resorted to making absurd findings
contrary to the evidence on record and in many cases ignoring
crucial evidence and deliberately or otherwise failing to refer to the
63 A.P.No.49/2022
& A.P.No.78/2022
same. Such a finding made by ignoring crucial evidence is clearly
patently illegal and opposed to public policy.
55. The Arbitral Tribunal ignored the letter dated
18.02.2014 (Ex.R.1/21), in the said letter, the Petitioner made an
alternative proposal to the Respondent No.1. This proposal made it
clear that the original bargain under the agreement to sell was
impossible to perform and hence, a separate transaction was
necessary. Therefore, the respondent No.1 had taken notice of
refusal Therefore, the Respondent No.1 had notice of refusal of
performance vide letter dated 18.02.2014 (Ex. R1/21). Hence, the
Respondent No.1 ought to have filed the claim within 3 years from
18.02.2014, ie, on or before 17.02.2017. However, the Respondent
No.1 failed and neglected to do so. Therefore, even if an extremely
lenient view is taken towards the respondent No.1, the claim for
specific performance/ damages was time barred. Additionally, the
Arbitral Tribunal ignored email dated 21.10.2013 (Ex. C168)
wherein the Petitioner reiterated that it would not be able to carry
out the transaction other than what was stated on 26.06.2013
(Ex.C168 Volume 3). Hence, even if this reckoned as the date of
refusal, the claims are barred by limitation. The Arbitral Tribunal
ignores this vital evidence and therefore the Impugned Award
deserves to be set aside.
56. It is further contended that, it is settled law that once
limitation starts, it does not stop unless there is any admission for
the purposes of Section 18 of the Limitation Act. There is no case
made out of any admission by the parties. As a matter of fact there
64 A.P.No.49/2022
& A.P.No.78/2022
is no document signed by the Petitioner making any admission that
it would perform the contract. This is admitted by the Respondent
No.1's witness who admits that the Petitioner had not agreed to
perform the Agreement to Sell in its original form after 2013. At
para 108 of the cross examination of CW-1 it is specifically
admitted that there is no letter after June 2013 agreeing to convey
the subject land in favour of the Respondent No.1. When this fact
is clearly admitted, limitation cannot be automatically extended.
When there is no case of extension of the period of limitation, the
question of making a finding that limitation had not even started till
the year 2017 is preposterous and cannot be sustained being
opposed to public policy of India. The Petitioner had raised
independent issues with respect to the claims being barred by
limitation. The Tribunal has not answered all the issues and has
simply concluded that the date of refusal is 2017. There are no
findings made with respect to the claims for damages being barred
by limitation.
57. The Petitioner and other vendors disputed that the
said sums are due. That apart, the Petitioner made a counter claim
for Rs.100,00,00,000/- against the Respondent No.1 for breach of
obligation under the Agreement to Sell. The evidence and
contentions of the parties are catalogued in paragraphs 338 to 381
of the Impugned Award. The findings of the arbitral tribunal are set
out in paragraphs 382 to 427 of the Impugned Award.
58. In paragraphs 382 to 394 of the Impugned Award, the
arbitral tribunal held that 01.09.2017 (Ex.C177) was the date of
65 A.P.No.49/2022
& A.P.No.78/2022
breach for computation of damages. Further, the arbitral tribunal
held that the expert report of Claimant Witness No.2 was liable to
be rejected since it computed damages for alleged breach of the
Agreement to Sell as on 31.03.2012 (Ex.C178). Hence, contrary to
the pleadings and evidence the arbitral tribunal awarded damages
to the Respondent No.1 reckoning 01.09.2017 as the date of
breach.
59. Arbitral Tribunal dismissed the claim for special
damages: For alleged failure of the Vendors to convey the
Schedule Property on 31 January 2012, the Respondent No.1 had
claimed special damages towards rental costs for leased premises,
margin of lessors on maintenance charges on leased premises,
stamp duty and registration charges for rental, increase in cost of
buildings and fit outs to be constructed on the Schedule Property
etc. In paragraphs 395 to 400, 406, 407 and 411 of the Impugned
Award, the arbitral tribunal rejected the claim for special damages
primarily on the grounds that the Vendors did not have notice of the
special damages that would be caused as a result of non-
conveyance of the Schedule Property and that no evidence proved
that such losses were indeed suffered by the Respondent No.1.
60. In the claim statement, the Respondent No.1/claimant
sought compensation for a sum of Rs.345 crores as damages for
breach of the Agreement to Sell in the event that specific
performance of the Agreement to Sell was granted, Further if
specific performance of the Agreement to Sell was not granted, the
Respondent No.1 sought compensation of Rs.451 crores. In
66 A.P.No.49/2022
& A.P.No.78/2022
paragraph 43 and 44 o the statement of claim, the Respondent
No.1 has specifically admitted that the said damages have been
claimed on the basis of the expert report (Ex.C178) prepared by
claimant Witness No.2. In paragraphs 1.11 and 1.12 of the expert
report (Ex.C178), the Respondent No.1 itself instructed the
Claimant Witness No.2 to reckon 31.01.2012 as the date of breach
for computation of damages. Hence, the finding of the Arbitral
Tribunal that the date of breach is 01.09.2017 (Ex.C177) is contrary
to the claim set up by the Claimant in its claim statement wherein
damages have been computed on the premise that the date of
breach was 31.01.2012 (as opposed to 01.09.2017 as held by the
Arbitral Tribunal). Thus, the findings of the Arbitral Tribunal are
dehors the pleadings of the Respondent No.1. It is settled legal
position that the parties pleadings are clear admissions and binding
on the Tribunal. If admissions are disregarded and findings are
made without reference to the admissions, the entire basis on
which claims and counter claims are made are completely lost and
defeated. The Tribunal by arriving at its own conclusions has
ensured that the Petitioner is not given any right to advert to these
new dates fixed by the Tribunal to compute damages and thus
violating principles of natural justice as well. Hence, the findings of
the Impugned Award are contrary to the most fundamental
principles of justice and deserve to be set aside.
61. The Arbitral Tribunal ignores vital evidence and
therefore the Impugned Award deserves to be set aside: The
Arbitral Tribunal has ignored vital evidence on record. In several
correspondences exchanged between the Petitioner and
67 A.P.No.49/2022
& A.P.No.78/2022
Respondent No.1 and the expert report, the Respondent No.1 itself
reckoned 31.01.2012 as the date of breach. In paragraph 22(d) of
the evidence affidavit of Claimant Witness No.1, the Respondent
No.1 itself has asserted the date of breach of Agreement to Sell is
31.01.2012. Furthermore, in paragraph 42 of the evidence affidavit
of Claimant Witness No.1, the Respondent No.1 asserted that the
date of construction of SEZ buildings of the Schedule Property was
reckoned as 28.02.2012, which ipso facto meant that the date of
breach was reckoned prior to the said date. Hence, when the
Respondent No.1 itself has pleaded and led evidence to claim that
the date of breach is 31.01.2012, it is absurd for the Arbitral
Tribunal to reckon 01.09.2017 as the date of breach, Hence, the
Impugned Award ignores vital evidence and deserves to be set
aside.
62. It is further contended that, in the letter dated
14.03.2014 (Ex.R1/15), the Respondent No.1's counsel on
Instructions alleged that the Petitioner committed breach of the
Agreement to sell on 30.11.2011. Hence, the evidence on record
and pleadings make it abundantly clear that the date of breach was
reckoned even by Respondent No.1 as 31.01.2012. The findings of
the arbitral tribunal ignore vital evidence and hence Impugned
Award deserves to be set aside.
63. The findings of the arbitral award in the Impugned
Award are contrary to the Limitation Act, terms of the Agreement to
Sell and deserve to be set aside; Article 27 of the Limitation Act
stipulates that if time is specifically fixed for performance of an
68 A.P.No.49/2022
& A.P.No.78/2022
obligation, compensation for breach of the promise has to be
claimed within three years from the date of breach of the promise.
In the instant case, the Agreement to Sell specifically stipulated that
the Schedule Property was to be conveyed to the Respondent No.1
on or before 30.11.2011. It is admitted position between the parties
that the Schedule Property was not conveyed on the said date.
Therefore, any claim for breach of the promise had to be instituted
on or before 29.11.2011. The Impugned Award fails to even to
advert to this aspect and does not provide any reasons for rejection
of contention of the Petitioner. Therefore, the Impugned Award fails
to give any reasons, ignores the terms of the Agreement to Sell and
the Limitation Act and is liable to be set aside.
64. It is further contended that, the Arbitral Tribunal failed
to consider the contention of the Petitioner that the claim for
damages is barred by limitation and deserves to be set aside.
Moreover, no reason has been assigned by the Arbitral Tribunal for
rejecting the contention of the Petitioner that the claim for refund of
advance sum is Rs.58,61,46,500/- and interest is barred by
limitation. Therefore, the Impugned Award is contrary to public
policy and deserves to be set aside.
65. It is further contended that, the Arbitral Tribunal
proceeds on the patently illegal premise that Clause 3 of the
Agreement to Sell allocated the total sale consideration of
Rs.195,38,25,000/- towards acquisition of the schedule property,
provision of road to the Schedule Property and for change in land
use. A mere perusal of Clause 3 of the Agreement to Sell will make
69 A.P.No.49/2022
& A.P.No.78/2022
it crystal clear that the said provision merely set out the manner in
which the sale consideration would be paid by the Respondent
No.1 to the Petitioner and other Vendors. Moreover, a perusal of
the Agreement to Sell would also make it abundantly clear that the
Respondent No.1 or the other parties never intended splitting up of
the obligations of the Agreement to Sell and performance of part of
the Agreement to Sell. For instance, Clause 12.2 of the Agreement
to Sell specifically provided that, in the event that the Vendors were
unable to secure the entirety of the Schedule Property, the
Respondent No.1 was entitled to termination of the Agreement to
Sell. Thus, the Agreement to Sell itself had a self-destruct
mechanism if the entirety of the Schedule Property was not
secured by the Vendors. In fact, the impugned award recasts the
agreement to sell executed between the parties to create rights and
obligations. This scenario was not in the contemplation of any of
the parties to the agreement to sell. This was not even the case of
the respondent No.1. The Tribunal ignores the case of the parties,
the pleadings and evidence and proceeds to make an award in a
manner which is completely unintelligible. Matters which are not
before the Tribunal, lack of pleadings, evidence etc., are writ large
in the award. As to how the Tribunal did its own computation
without even giving the parties an opportunity to respond or place
its submissions also shows an absolute violation of natural justice.
Thus, the impugned award is patently illegal and deserves to be set
aside.
66. The Award recognises that the claims as made cannot
be awarded. The Award alters the claims at the Tribunals whims
70 A.P.No.49/2022
& A.P.No.78/2022
and makes an award which is clearly oppressive and is without
notice to any party. An arbitral tribunal cannot go beyond the
contract. In this case, the Tribunal has exceeded its scope entirely.
The tribunal at paragraph 441 holds that it is modulating the reliefs.
By modulating the reliefs the Tribunal has altered the claims of the
parties and has made an award contrary to the claim itself. It is
necessary to mention that when the claim is altered, the
respondents must have an option of resisting the same. However,
if the tribunal alters the claim and makes findings on matters which
are not within the knowledge of the petitioner and other such
parties, natural justice is completely violated. By attempting to do
'substantial justice' the tribunal has exercised a power, which it
does not have. Power to act "ex aequo et bono" or as "amiable
compositeur" has to be specifically granted by the parties. A
Tribunal cannot do "substantial justice" and in an attempt to
"substantial justice" (Which possibly only the Hon'ble Supreme
Court can do under Article 142 of the Constitution of India), the
Tribunal has altered the claims and delivered a highly confused
award which on its own showing cannot be sustained. The award is
opposed to the Arbitration Act, is patently illegal and cannot be
sustained on any count.
67. It is further contended that, a mere perusal of the
Claim Statement of the Respondent No.1 will make it clear that the
Respondent No.1 sought specific performance of the Agreement to
Sell for the entirety of the Schedule Property along with damages
for delay OR refund of advance consideration of Rs.58,61,47,500/-
along with damages for non-performance of the Agreement to Sell.
71 A.P.No.49/2022
& A.P.No.78/2022
It is trite law that Arbitral Tribunal cannot go beyond the pleadings
of the parties. In the Impugned Award, the Arbitral Tribunal has
granted part- performance of the Agreement to Sell. The said relief
was not even pleaded by the Respondent No.1 in its claim
statement. The fact that the Respondent No. 1 did not even claim
for specific performance of a portion of the property and instead
demanded payment of money shows that there was no intention to
claim part performance. Partial performance in any event was
rejected earlier. Moreover in the application under Section 33, it is
admitted that such partial performance was ordered though it was
never the claim of the Respondent No. 1. Therefore, the Impugned
Award is contrary to the most fundamental principles of justice
since it grants reliefs not prayed by Respondent No.1 itself. The
Impugned Award is opposed to fundamental policy of Indian law, is
patently illegal and contrary to public policy and deserves to be set
aside.
68. It is further contended that, The Impugned Award is
contrary to Section 28(3) and Section 31 of the Arbitration and
Conciliation Act, 1996: After the Arbitration and Conciliation
(Amendment) Act, 2015 has come into force, the Arbitral Tribunal is
under an obligation to take into account the terms of the Agreement
to Sell and applicable law while passing the Impugned Award.
However, an award cannot be contrary to the agreement between
the parties. The Impugned Award, de facto, renegotiates the
bargain agreed between the parties under the Agreement to Sell.
The Arbitral Tribunal has not even considered the terms of the
Agreement to Sell, the provisions of the Limitation Act and the
72 A.P.No.49/2022
& A.P.No.78/2022
Specific Performance Act while passing the Impugned Award.
Moreover, the reasons given for modulation of the reliefs are
unintelligible, arbitrary and without guiding principle. Hence, the
Impugned Award is contrary to public policy and deserves to be set
aside.
69. It is further contended that, the findings of the Arbitral
Tribunal relating to injunction on the Schedule Property in relation
to which specific performance is granted is without jurisdiction and
deserves to be set aside: The Arbitral Tribunal has injuncted the
petitioner and other vendors from alienating the schedule property
until the execution of the sale deed. While this injunction is styled
as final relief, it is in effect an ad interim injunction under Section 17
of the Arbitration and Conciliation Act, 1996. After the Arbitration
and Conciliation (Amendment) Act, has come into force, arbitral
tribunals do not have the power to grant ad interim relief after
passing of the arbitral award. Thus, the grant of injunction by the
arbitral tribunal until the conveyance of the schedule property to the
respondent No.1 is wholly without jurisdiction and deserves to be
set aside. The injunction granted against other third parties is also
not maintainable and shows very clearly that the relief is beyond
the jurisdiction of the tribunal and cannot be sustained. Third
parties are not parties before the Tribunal as well and consequently
no relief can be granted against such third parties.
70. It is contended that, counter claims of the petitioner
have not been considered or answered. Application for
amendment was wrongly kept pending till the very end without any
73 A.P.No.49/2022
& A.P.No.78/2022
adjudication. Order of the tribunal in not considering the
amendment application and deciding to deal with it at the time of
the award was completely improper and patently illegal.
Amendment application could not have been rejected in a
simpliciter manner as was done in the arbitral award. This entire
process of dealing with the amendment application at the final
stage has resulted in gross injustice to the Petitioner.
71. There is no consideration of the counter claims of the
Petitioner. The counter claims have been simply rejected without
there being any consideration as is stipulated by law. The rejection
of the counter claims without a proper examination of the same is
patently illegal and cannot be sustained. The refusal to consider the
counter claims has resulted in gross injustice, violation of public
policy and the award cannot be sustained on that count as well.
Hence prayed to allow the petition and set aside the impugned
award.
72. The respondent No.1/claimant has filed statement of
objections contending that, the present Petition is not maintainable
either in law or on facts of the case and hence requires to be
dismissed in limine with exemplary costs. The entire proceedings
are merely an attempt to protract the proceedings and to harass
this Respondent. The Parties are hereinafter referred by the array
in the proceedings before the Arbitral Tribunal for the purpose of
convenience and continuity whereby, this Respondent is referred to
as the Claimant and the Petitioner and the other Respondents in
this proceedings are referred to as the Respondents 1, 2 or 3 as
applicable.
74 A.P.No.49/2022
& A.P.No.78/2022
73. This Respondent submits that a proceedings under
Section 34 of the Arbitration and Conciliation Act, 1996 is very
limited in scope with regard to the extent of the jurisdiction of this
Court to set aside the award. Section 34 provided for the following
grounds based on which an Award may be set aside only if the
party making the application establishes on the basis of the record
of the Arbitral Tribunal all or any of the following:
(a) That 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 the time being in force.
74. The Arbitration Agreement is part and parcel of an
Agreement to Sell and the Arbitrator was appointed pursuant to an
Order of consent for such appointment in the proceedings before
the Hon'ble High Court of Karnataka in CMP.320/2017. The
Statement of Defence filed by the Respondent No.2 before the
Arbitral Tribunal did not raise any contention that the Agreement to
Sell was not valid under any law for the time being in force. There
is no such contention raised by the Respondent No.2 to the
contrary in the present proceedings. The existence of an arbitration
agreement and its extent and scope is an admitted position by the
Respondents.
b) That the party making the application was not
given proper notice of the appointment of an arbitrator or of
the arbitral proceedings or was otherwise unable to present
his case:
75 A.P.No.49/2022
& A.P.No.78/2022
75. In this case, the appointment of the Arbitral Tribunal
was through the judicial process and by the Hon'ble High Court of
Karnataka in CMP No.320/2017 and the Respondent No.2 was
represented by its Counsel in such proceedings. Additionally the
Respondent No.2 was represented by an independent Counsel
before the Arbitral Tribunal and was provided ample opportunity to
present its case. Therefore, the Respondent No.2 was given proper
notice of the appointment of an arbitrator and of the arbitral
proceedings as also utilised all the opportunities to present its case.
There is no such contention raised by the Respondent No.2 to the
contrary in the present proceedings.
c) That the arbitral award deals with a dispute not
contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on matters
beyond the scope of the submission to arbitration.
76. The proceedings instituted before the Arbitral Tribunal
was for the relief of specific performance of the contract and for
damages in addition thereto as morefully set out in the Statement
of Claim. The parties never disputed or raised any issue related to
the extent and scope of the arbitration proceedings. The Arbitral
Tribunal provided for Specific Performance of the Agreement to Sell
and also provided for damages. The Respondents contended that
they are ready and willing to perform their part of the contract and
the Respondent No.2 specifically contended that they are ready to
sell 25 Acres 10 Guntas of land. The Arbitral Tribunal having found
that out of the said extent only 18 Acres 39 ½ Guntas pertained to
the Schedule Property and therefore granted Specific Performance
76 A.P.No.49/2022
& A.P.No.78/2022
of the Agreement to Sell in part in terms of the powers vested with
the Arbitral Tribunal in terms of Section 12 (4) of the Specific Relief
Act, 1963 and provided for damages for the extent that remained
unperformed. In any event the Arbitral Tribunal has the power to
mould the relief to the parties and that therefore the Award has
neither dealt with any dispute not contemplated by or not falling
within the terms of the submission to arbitration, nor it contains
decisions on matters beyond the scope of the submission to
arbitration.
d) That 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 this Part from which the parties cannot derogate,
or, failing such agreement, was not in accordance with this
Part.
77. The Agreement to Sell at Clause 13.1 and 14.2
provided as under:
13.1. In the event of there being any dispute with
regards to this Agreement to Sell or interpretation of any of
the Clauses hereof, the same shall be referred to a Sole
Arbitrator. The arbitration shall be as per the provisions of
Indian Arbitration and Conciliation Act, 1996. The venue of
Arbitration shall be Bangalore only and the language and
proceedings shall be English only.
14.2 All other rights and obligations of parties herein
for which no specific provisions are made in this Agreement
shall be governed by the provisions of the Transfer of
Property Act, 1882 and any other law for the time being in
force.
77 A.P.No.49/2022
& A.P.No.78/2022
Therefore the composition of the Arbitral Tribunal and the
procedure was as agreed by the Parties and as laid down by the
Arbitral Tribunal with the consent and concurrence of all the parties
to the said proceedings.
(e) That the subject-matter of the dispute is not
capable of settlement by arbitration under the law for the
time being in force, that the arbitral award is in conflict with
the public policy of India, if the making of the Award was
induced or affected by fraud or corruption or was in violation
of Section 75 or Section 81; or is in contravention with the
fundamental policy of Indian law; or it is in conflict with the
most basic notions of morality or justice.
78. The dispute was a claim for specific performance and
as provided for under the Specific Relief Act and as agreed to
between the Parties. Clause 12.1 of the Agreement to Sell provided
the remedy to the said effect, and the same is extracted hereunder
for the immediate reference of this Court.
12.1 In the event of either party to this Agreement committing
breach, the aggrieved party shall be entitled to enforce
specific performance of this contract and also recover all
costs, expenses and losses incurred by the aggrieved party,
as a consequence of such breach from the party committing
breach.
Therefore the dispute was capable of being adjudicated by
way of a proceedings by way of Arbitration. The Respondents
never raised such issue either before the Hon'ble High Court at the
time of appointment of Arbitration or during the entire course of the
arbitration proceedings.
78 A.P.No.49/2022
& A.P.No.78/2022
79. The Award can be contrary to the public policy if the
making of the Award was induced by fraud or corruption. There is
no such contention raised by the Respondent No.2 alleging that the
Award is vitiated on account of fraud or corruption. Additionally,
Section 75 and 81 are reproduced as hereunder:
Section 75: Confidentiality. Notwithstanding anything
contained in any other law for the time being in force, the
conciliator and the parties shall keep confidential all matters
relating to the conciliation proceedings. Confidentiality shall
extend also to the settlement agreement, except where its
disclosure is necessary for purposes of implementation and
enforcement.
Section 81: Admissibility of evidence in other
proceedings. - The parties shall not rely on or introduce as
evidence in arbitral or judicial proceedings, whether or not
such proceedings relate to the dispute that is the subject of
the conciliation proceedings, -
(a) views expressed or suggestions made by the
other party in respect of a possible settlement of the dispute;
(b) admissions made by the other party in the course
of the conciliation proceedings;
(c) proposals made by the conciliator;
(d) the fact that the other party had indicated his
willingness to accept a proposal for settlement made by the
conciliator.
80. Claimant submits that there was no conciliation
proceedings which was held between the Parties to the dispute
either after the commencement of the Arbitral Tribunal or during the
course of the said proceedings. Therefore, question of applicability
of the provision of the Section 75 or Section 81 does not arise.
79 A.P.No.49/2022
& A.P.No.78/2022
81. The Respondent No.2 claims that, the Award is in
contravention with the fundamental policy of Indian law and that the
same is in conflict with the most basic notions of morality or justice
and has sought to set aside the Award on these grounds alone.
The Claimant submits that, the grounds raised by the Respondent
No.2 to set aside the award are without any merit, baseless and
that, therefore, the Award requires to be confirmed and the present
Petition requires to be dismissed.
82. The Respondent No.1/Claimant contended that, none
of the grounds under Section 34 for setting aside the Award are
available to the Petitioner and therefore, the petition is liable to be
dismissed in limine.
83. The Respondent No 1 / Claimant contends that, they
examined two witnesses and Exhibited Ex.C1 to Ex.C179 in
support of its case. The Respondents though initially filed affidavit
evidence of two witnesses and when it was time to cross examine
their witnesses, withdrew the affidavit evidence and did not lead
any oral evidence or documentary evidence and merely produced
some documents which were identified as Ex.R1/1 to Ex.R1/22,
Ex.R2/1 to Ex.R2/27 and Ex.R3/1 to Ex.R3/4 many of which are not
admitted by the Claimants.
84. The arbitral award was passed on 22nd March 2021 in
Arbitration Case 23 of 2019 pursuant to the disputes arising out of
the Agreement to Sell executed on 2nd November 2011. The
Claimant filed an Application under Section 33 of the Act seeking
80 A.P.No.49/2022
& A.P.No.78/2022
additional awards, rectification of award etc, and the same came to
be dismissed vide order dated 29.12.2021.
85. The Claimant contended that, the findings stated and
the grounds raised in petition para Nos.1 to 115 of the petition are
all distorted and the claimant traverses the findings and the
grounds. The averments made in the said paras are denied in
entirety except to the extent admitted specifically or forming part of
records. All other allegations made contrary to the records are
denied as false. The respondent No.1/claimant answered para
Nos.19 to 115 of the petition and contended that, all other
allegations which are not specifically traversed and which are
contrary to and inconsistent with the statement of objections and
which are not admitted either specifically or by necessary
implication or denied as false.
86. The claimant/respondent No.1 prayed to confirm the
award and dismiss the application under Sec.34 of Arbitration and
Conciliation Act, with exemplary cost.
87. Advocate for respondent No.2 filed memo dated
20.11.2023 adopting his contentions in A.P.78/2022 and objections
filed before arbitral tribunal in A.C.No.23/2019 as objection to this
petition in A.P.No.49/2022.
88. Advocate for respondent No.3 filed memo dated
20.11.2023 adopting his statement of objections filed in
A.C.No.23/2019 and petition filed under Sec.34 in A.P.No.78/2022
as objections to this petition in A.P.No.49/2022.
81 A.P.No.49/2022
& A.P.No.78/2022
89. The petitioners in A.P.No.78/2022 have preferred the
petition under Sec.34 of the Arbitration and Conciliation Act,
contending that, the Award passed by Hon'ble Arbitral Tribunal
dated 22.03.2021 in A.C.No.23/2019 to the extent that, the
impugned Award makes the petitioners jointly and severally liable in
the operative portion of the Award dated 22.3.2021 at Paras 451
(b), 451 (c), 451 (d), 451 (2), 451 (3), 451 (5), 451 (6) and 451 (7)
and that extent of the Award challenged by Petitioners suffers from
various legal and factual infirmities and is opposed to fundamental
policy of Indian Law and is vitiated by patent illegalities. There is an
error that is apparent on the face of the record in the Award passed
by the Learned Arbitrator as it is, a)Contrary to the terms and
conditions, expressly mentioned in the Agreement, in dispute,
b)Evidence on record and c)Applicable Laws, as such the extent of
Award challenged is against "justice and morality" because the
illegality committed goes to the root of the matter.
90. Petitioners have challenged the Award to the extent
that, the finding of the Hon'ble Tribunal holding that Respondent
No. 1 is entitled to acquire from the Petitioners, the right of access
through a properly laid down 80 ft. wide access road at Para 451
1(b) and further, granting compensatory damages to the tune of
Rs.8.164 crores jointly and severally from Petitioners and
Respondent No. 2 in the event of failure to provide 80 ft. wide
access road at Para 451 1(c) is patently illegal, without properly
appreciating the evidence placed on record and amounts to
perverse interpretation of the contract between the parties and is
opposed to public policy of India.
82 A.P.No.49/2022
& A.P.No.78/2022
91. That the finding of the Hon'ble Tribunal holding that
Respondent No. 1 would be entitled to receive from the Petitioners
jointly and severally along with Respondents No. 2 payment of
compensation as damages at Para 451 1(e) of the Award for failure
to receive necessary permission/order for change of land use to the
tune of Rs. 22.101 Crores is patently illegal, without properly
appreciating the evidence placed on record and amounts to
perverse interpretation of the contract between the parties and is
opposed to public policy of India.
92. That the finding of the Hon'ble Tribunal to grant
Compensatory damages to Respondent No. 1 for a sum of
Rs.33.901 Crores for the lands admeasuring 8 Acres 29 ½ Guntas
(lands on which specific performance was not granted), and further,
fasten the Petitioners with joint and several liability along with
Respondents No. 2 for payment of the said compensatory
damages at Para 451 (2) of the Award is patently illegal, without
properly appreciating the evidence placed on record and amounts
to perverse interpretation of the contract between the parties and is
opposed to public policy of India.
93. That the finding of the Hon'ble Tribunal to hold that
Respondent No. 1 would be entitled to recover from the Petitioners
and Respondent No. 2, the interest payable on the compensatory
damages granted at 451 1 (c) and/or 451 1 (e) at Para 451 (3) of
the Award is patently illegal, without properly appreciating the
evidence placed on record and amounts to perverse interpretation
of the contract between the parties, and is opposed to public policy
of India.
83 A.P.No.49/2022
& A.P.No.78/2022
94. That the finding of the Hon'ble Tribunal to hold that
Respondent No. 1 would be entitled to recover from the Petitioners
and Respondent No. 2 jointly and severally, all costs towards
arbitrator fees, Centre administrative charges, travel,
transportation, conveyance, food, accommodation expenses and
other expenses including cost of paper advertisement as per the
order of the Arbitral Tribunal at Para 451 (5) of the Award is patently
illegal, without properly appreciating the evidence placed on record
and amounts to perverse interpretation of the contract between the
parties, and is opposed to public policy of India.
95. The finding of the Tribunal to hold that 1 st respondent
would be entitled to recover from Petitioners and 2 nd Respondent,
jointly and/or severally Rs.6,00,000/- towards cost of legal fees and
expenses of the Arbitration at Para 451 (6) of the Award is patently
illegal, without properly appreciating the evidence placed on record
and amounts to perverse interpretation of the contract between the
parties and is opposed to public policy of India.
96. That the finding of the Hon'ble Tribunal to hold that
Respondent No. 1 would be entitled to recover from the Petitioners
and Respondent No. 2, jointly and severally, the interest payable at
the simple rate of 12% p.a. on the sums awarded amount as per
the direction of Respondent No. 3/Hon'ble Tribunal at Para 451 2,
3, 4, 5 and 6 from the date of the award until the actual realization
at Para 451 (7) of the Award is patently illegal, without properly
appreciating the evidence placed on record and amounts to
perverse interpretation of the contract between the parties and is
opposed to public policy of India.
84 A.P.No.49/2022
& A.P.No.78/2022
97. Further, the petitioners have preferred this petition on
the grounds that, the Petitioner No. 1 before the Hon'ble Tribunal
had specifically taken up the contention in its pleadings that they
were always ready and willing to perform its obligations, and that
Respondent No. 1 should be granted the relief of Specific
Performance of the Agreement to Sell and the same would enure to
the benefit of Petitioners herein. It was further submitted that the
role of Petitioner No. 1 was merely of a facilitator and had no role
under the Agreement to purchase the Schedule Property. In so far
as Petitioner No. 2 is concerned, it was contended that in view of
assignment of its rights in favour of Petitioner No. 1 and since no
specific averment was made or relief was sought against Petitioner
No. 2, it would adopt the Statement of Objections filed by Petitioner
No. 1. It was submitted to the Hon'ble Tribunal that under Clause
VIII(a) of the Agreement, the obligation of securing the Schedule
Property was that of Respondent No. 2. Clause VIII (a) is produced
hereinbelow,
"that the Vendor Party No.1 will secure the Sale
Deeds in respect of the Schedule Property in its favour
to enable the conveyance thereof in favour of the
Purchaser"
98. Therefore, in order to facilitate this process before
entering into the Agreement to Sell, and thereafter as well, i.e.
between 2011 to 2013, Petitioner No. 1 as on 20.02.2012 had paid
a sum of Rs. 71 Crores to Petitioner No. 2, and thereafter had also
paid a sum of Rs. 25 Crores thereby totaling to Rs. 96 Crores, and
upon which the Petitioner No.2 had in turn paid Respondent No. 2,
85 A.P.No.49/2022
& A.P.No.78/2022
a sum of Rs. 95 Crores. It was for this reason that the Agreement to
Sell stipulates that the advance monies and the sale consideration
would be received by Petitioner No.1 for and on behalf of Petitioner
No. 2 and Respondent No. 2 herein. The Petitioners had complied
with their obligations and effected necessary payments to
Respondent No. 2, who as per the Agreement to Sell was obligated
to purchase the Schedule Property to enable the sale in favour of
Respondent No. 1.
99. On bare reading of Clauses VIII(a) to VIII(p) of the
Agreement to Sell, it would be evident that the same is a contingent
contract as envisaged under Section 32 of the Indian Contract Act,
1872 and until and unless the contingency is met, the performance
of the contract may not arise. Respondent No. 2 was to procure
land and obtain a marketable title before the conclusion of the
contract. Therefore, there could be no specific performance
directed against the Petitioners herein. Petitioners could not be
held jointly and severally liable since they had not guaranteed that
the transaction would go through and had further not indemnified
Respondent No. 1 in the event of failure of Respondent No. 2 to
procure the Schedule Properties. Petitioners under the Agreement
to sell had not given any guarantee that it would perform the
obligation of Respondent No. 2 in the event they default in securing
title to the Schedule Property. In any event, if the contingency fails
to arise or does not transpire at all, said Section stipulates that the
contract itself becomes void and unenforceable. Therefore,
fastening of any liability on the Petitioner to perform the contract
jointly or severally would not arise. It was submitted to the Hon'ble
86 A.P.No.49/2022
& A.P.No.78/2022
Tribunal that it was in fact the onus of Respondent No. 2 as per
Clause VIII (a) of the contract to procure the lands and only if this
contingency is met, the Petitioner and Respondents No. 2 & 3 were
to jointly execute a sale deed in favour of the Respondent No. 1. It
is was an admitted position by all the parties before the Hon'ble
Tribunal that Respondent No. 2 was unable to procure the entirety
of the extent as envisaged under the contract and was able to
procure only 25 Acres 10 Guntas. It was submitted that, PW-1 has
admitted in the cross Examination at Page 47 that the obligation to
purchase the Schedule Property by Respondent No. 1 was
contingent upon title being acquired for the balance portion.
Therefore, the contingency even as admitted by PW-1 is acquisition
of the balance portion of land which as per Clause Vill (a) of the
Agreement to Sell, is cast upon Respondent No. 2. This obligation
of procurement has not been denied anywhere by Respondent No.
2. The Petitioner has all along made its best possible and sincere
efforts to conclude the contract and since the onus to procure the
lands was cast only on Respondent No. 2, Petitioner had to
express its helplessness towards Respondent No. 1.
100. The Hon'ble Tribunal while considering the aspect of
joint and several liability has affirmed the contention that in the
preamble of the Agreement, it is clearly mentioned that it was upon
Respondent No. 2 to secure the sale deeds in respect of Schedule
Property. Further, the Hon'ble Tribunal has observed that in the
preamble of the Agreement, it is clearly stated that Respondent No.
2 having already acquired 11 Acres, was in the process of acquiring
remaining 24 Acres of land to be sold to Petitioner No. 2 as part of
87 A.P.No.49/2022
& A.P.No.78/2022
their MOU who would in turn sell the same to the Petitioner No. 1.
However, the Hon'ble Tribunal rejected the contentions of
Petitioners, holding that Petitioners are joint and/or severally liable
with Respondents No. 2, and observed the following,
a. That in respect of discharge of the Agreement, there is no
separate and distinct obligation made under the Agreement
between the Petitioners and Respondents No. 2.
b. That the language used under the Agreement under
various clauses indicates that the obligation was placed on the
"vendors", that is the Petitioners and Respondents No. 2 together
and in view of the usage of the term "vendors", it cannot be said
that the obligation cast upon them was separate and distinct for
each of them.
c. That the Agreement constituted entire agreement between
the parties and supersedes all the agreements and understandings
between the parties and therefore, the contentions of Petitioners
and Respondents No. 2 that liability is separate on each of them
could not be accepted.
d. That the defense put forth by the Petitioners that the
contract was a contingent contract under Section 31 & 32 of the
Indian Contract Act, 1872 was rejected holding that even though
parties (Petitioners and Respondent No. 2) may have separate
inter-se agreements amongst themselves, the obligation under the
Agreement to Sell dated 02.11.2011 was taken over by all the
parties (Petitioners and Respondent No. 2) and since consideration
paid to Petitioner No. 1 is deemed to as paid to Respondent No. 2
88 A.P.No.49/2022
& A.P.No.78/2022
& Petitioner No. 2, it could not be said that the contracts were
separate and distinct with each of the Respondents.
e. That the contention put forth by the Petitioners, that it was
merely acting as a facilitator and that Petitioners could not be held
responsible for any default of Respondent No. 2 was rejected by
the Hon'ble Tribunal holding that the Agreement was not a contract
of guarantee but it was a joint promise in their capacity as vendors.
101. The conclusion arrived by the Hon'ble Arbitrator that
Petitioners and Respondent No. 2 are jointly and/or severally liable
based on the fact that the clauses of the Agreement refers to the
parties together as "Vendors" and therefore, there is no separate
and distinct liability amongst the parties is wholly erroneous and
amounts to perverse interpretation of the contract between the
parties and wholly disregards the purpose and intentions of the
Agreement to Sell dated 02.11.2011. The Hon'ble Tribunal at Para
185, Page 154 affirms the contentions of the Petitioners that in the
preamble of the Agreement to Sell dated 02.11.2011, the obligation
to acquire the Schedule Property was only upon Respondent No.2.
The Hon'ble Tribunal further recognized that Respondent No. 2
having acquired 11 Acres at the time of execution of agreement,
was in the process of acquiring the remaining portion of 24 Acres
as agreed by Respondent No. 2 with Petitioners under their MOU.
In view of the said factual propositions having been accepted, the
conclusion arrived thereafter that purely because of the usage of
the term "Vendors", it ought to be reckoned that all parties would be
liable to discharge the liability in favour Respondent No. 1 goes
against the very basic terms of the Agreement to Sell dated
89 A.P.No.49/2022
& A.P.No.78/2022
02.11.2011 vis-à-vis Clause VIII(a) of the Agreement. The Hon'ble
Tribunal fails to read Clause VIII (a) of the Agreement in
consonance with the other terms of the agreement. The
observations of the Hon'ble Tribunal the usage of the term Vendors
in the agreement would show that Agreement intended on joint
and/or several liability is an erroneous understanding of the terms
of the Agreement to Sell dated 02.11.20211. The Hon'ble Tribunal
ought not to have deviated from the terms of the Agreement and
fasten liability on all parties due to failure of one party to perform its
obligation under the contract, which not forthcoming from the
Agreement to Sell.
102. The finding of Hon'ble Tribunal holding that Petitioners
and Respondent No.2 are jointly and severally liable despite no
such clause in the agreement is tantamount going beyond the
terms of the contract and cannot be sustained. However, as can be
seen from the terms of the Agreement in so far as obligations to
purchase of the Schedule Property was placed only on Respondent
No. 2 under Clause VIII (a) of the Agreement. It is submitted that,
there was no obligation placed on Petitioners that if Respondent
No. 2 fails to discharge its obligation under the Agreement, the
obligation would fall upon the Petitioners to discharge the obligation
of acquiring the Schedule Property. However, as stated
hereinabove, the parties at the time of execution of the Agreement
have chosen to place the obligation only upon Respondent No. 2,
who admittedly does not dispute the said fact. Such being the case,
the Hon'ble Tribunal holding that in view of the usage of term
"Vendors" in the agreement, the same would constitute joint and/or
90 A.P.No.49/2022
& A.P.No.78/2022
several liability even on the Petitioners for performance of
obligation under the Agreement is a wholly perverse interpretation
of the Agreement and ought to be set aside to that extent.
103. The obligation to purchase the Schedule Property
which is subject matter of Agreement to Sell dated 02.11.2011 and
secure Sale Deeds in respect of the same, as per Recital - VIII (a)
was solely bestowed on Respondent No. 2 herein, as expressly
agreed to between the parties, is undisputed. There was no
obligation fastened on either Petitioner No. 1 or 2 under the above
Agreement in this regard. Hence, the Tribunal holding that
Petitioners and Respondent No.2 were jointly and/or severally
liable to comply with their obligations i.e., to sell the Schedule
Property, prior to happening of the aforesaid event would amount to
'patent illegality as it would amount to re-writing the terms and
conditions that were mutually agreed to between the parties under
the Agreement, by the Tribunal which is not permissible in law as
such, the Award in so far as Issue No.6 is concerned is liable to be
set aside. The fact that there were no Recitals and/or Clauses in
the above Agreement that obligated the Petitioner to either
expressly or impliedly procure/obtain Sale Deeds in respect of the
Schedule Lands, in dispute, therefore, the Impugned Award
fastening an additional obligation on the Petitioners herein to
procure and convey the Schedule Property, contrary to the above
Agreement has resulted in total "miscarriage of Justice" which calls
for interference under Section 34 of the Act. Since, Petitioner No.1
was disabled from complying with its obligation towards
Respondent No.1 under the above Agreement till Respondent No.2
91 A.P.No.49/2022
& A.P.No.78/2022
complied with its obligations as per Recital - VIII (a) in toto, the
finding of the Tribunal in the Award stating that the contention of
Petitioner No. 1 that is merely a facilitator is without foundation and
that obligation as sought to be divided cannot be read in the
Agreement is totally erroneous and against the 'fundamental policy
of Indian law' as the Impugned Award passed is contrary to the
substantive law and the terms of contract, per se. Further, the
Tribunal also blatantly erred in passing the Impugned Award based
on the assumption that the obligations of the Petitioners and
Respondent No. 2 under Clause - 4 of the above Agreement would
come into effect immediately, which is an incorrect interpretation,
as it was totally impossible and impartial for the Petitioners to do
so, without Respondent No. 2 fulfilling its part of the promise i.e.,
Recital - VIII (a), at the first instance, as per the sequence of
performance, as agreed to between the parties under the contract.
The modification of the sequence of performance under the
contract in the Impugned Award is against settled principles of law
while enforcing a contract, needs to be re-considered.
104. In the like manner, Petitioner No.2 being just a
formal/confirming party to Agreement, as per Recital - IV which
reads as under :
"IV. WHEREAS the Vendor Party No.3 herein being
desirous of purchasing the Said Lands approached Vendor
Party No.1 and Vendor Party No.2 for purchase of the Said
Lands and whereas Vendor Party No.2 has agreed to assign
all its right, title and interest to purchase the Said Lands
which it agreed to acquire from Vendor Party No.1 which has
been duly accepted by the Vendor Party No.1 and
92 A.P.No.49/2022
& A.P.No.78/2022
accordingly Vendor Party No.2 executed a Memorandum of
Understanding assigning its rights to purchase the Said
Lands in favour of Vendor Party No.3."
105. There were no obligations cast on Petitioner No. 2 in
the said Agreement, but to concur and confirm their previous
understanding/transactions only. Hence, on the liability that could
be cast on Petitioner No.2, the finding in respect of Issue No. 9
being contrary to evidence, needs to be set aside. Respondent
No.2 having placed itself in an advantageous position, by
encashing and having benefitted from the sum of the Rs. 95 Crore
which was received from Petitioner No. 2 and failed to comply with
its preliminary obligation under the Agreement i.e., Recital - VIII (a),
ought to be solely held liable for the loss or damage caused due to
the breach of contract. However, the Tribunal by holding that the
Petitioners and Respondent No. 2 to jointly and/or severally liable,
the same amounts to misapprehension of the true state of facts and
impropriety in the Award passed.
106. As per Recital III, IV and V of the Agreement to Sell,
dated 02.11.2011, the previous Memorandum of Understanding
dated 01.07.2011 entered into between Respondent No.1 and
Petitioner No.2 as well as the Memorandum of Understanding
dated 01.07.2011 entered into between Petitioner No.2 and
Petitioner No.1 herein were in force and effective. In this regard,
Petitioner No.1 having paid a sum of Rs.96 Crore to Petitioner No.2
and Petitioner No.2 having paid a sum of Rs.95 Crore to
Respondent No.2 which was their only obligations to be complied
with at that point in time, clubbed with the fact that Petitioner No.1
93 A.P.No.49/2022
& A.P.No.78/2022
was always ready and willing to comply with its obligations under
the Agreement and having called upon Respondent No.2 to do so.
The Tribunal has failed to consider the "preponderance of
possibilities" in so far as the Petitioners, the performance of their
obligations are concerned while passing the Impugned Award. The
impugned Award failed to appreciate the fact that there was no
failure or neglect on the part of the present Petitioners herein to
perform the obligations under the Agreement to Sell dated
2.11.2011. Further, the Claimant and Respondent No.2 have failed
to show how the Petitioners has failed or neglected to perform its
obligations under the Agreement to Sell dated 02.11.2011. When
that being the case, the impugned Award holding the Petitioners
herein jointly and severally liable along with Respondent No. 2, is
highly arbitrary, illegal and to that extent liable to be set aside. The
impugned Award fails to take note that Petitioners who have
invested the money in procuring the land and that the present
Petitioners have paid the amounts towards the total extent of land
purchased by respondent No.2 as per the agreement to sell dated
2.11.2011 and due to the failure of respondent No.2, petitioners
cannot be penalized.
107. The petitioners submitted that, in the event the
Tribunal had granted Specific Performance in total as claimed by
the respondent No.1, the same would enure to the benefit of both
the petitioners and respondent No.1 herein and would also protect
their interest as agreed under the agreement to sell dated
02.11.2011. The Tribunal having granted part performance of the
contract, ought not to have made petitioners jointly and/or severally
94 A.P.No.49/2022
& A.P.No.78/2022
liable and cast the entire liability upon the respondent No.2. As can
be seen from the records and material placed before the Arbitral
proceedings, the petitioners have paid the total sale consideration
for purchase of land under the Agreement to sell. It is only due to
the failure on the part of the respondent No.1 & 2 to conclude the
transaction, petitioners are being penalized. As a matter of fact,
petitioners have paid consideration more than what is required to
purchase the property under the agreement to sell. When that
being the case, the impugned order fastening joint and several
liability on the petitioners is contrary to the terms and conditions of
the agreement to sell in so far as it makes the petitioners also
jointly and severally liable.
108. In so far as the contention raised by Petitioners that
the Agreement to Sell dated 02.11.2011 is a contingent contract,
the Tribunal has rejected the said contention holding that even
though in the preamble of Agreement, it is mentioned that
Respondent No. 2 is in process of acquiring the 24 Acres of Land,
the obligation to transfer the land to Respondent No. 1 was of both
the Petitioners and Respondent No. 2. The Hon'ble Tribunal further
holds that interse agreement between the Petitioners and
Respondent No. 2 would not have any bearing on the Agreement to
Sell dated 02.11.2011, since the obligations under the said
Agreement have been taken over amongst the Petitioners and
Respondent No. 2 jointly and severally. The Hon'ble Tribunal further
observes that if the contract is read as it is, it cannot be said to be
contingent contract. It is most respectfully submitted that the
conclusion arrived by the Hon'ble Tribunal with regards to
95 A.P.No.49/2022
& A.P.No.78/2022
Contingent contract is in complete aberration to statute enshrined
under Section 31 and 32 of Indian Contract Act, 1872. The findings
of the Hon'ble Tribunal are contrary to the provisions of the law and
against the terms of the Agreement to Sell entered between the
parties. It was submitted to the Hon'ble Tribunal that the
Agreement to Sell is contingent contract vis-à-vis the contingency
being that Respondent No. 2 had to procure the Schedule Property
in order to enable the Petitioners and Respondent No. 2 to convey
the same to Respondent No. 1. As stated hereinabove, a bare
reading of Clauses VIII(a) to VIII(p) of the Agreement to Sell, it
would be evident that the same is a contingent contract as
envisaged under Section 32 of the Indian Contract Act, 1872 and
until and unless the contingency is met, the performance of the
contract may not arise. Further, in view of PW-1 admission in the
cross examination that the obligation to purchase the Schedule
Property by the Respondent No. 1 was contingent upon title being
acquired for the balance portion, it can be naturally understood that
the entire contract was contingent on Respondent No. 2 performing
its obligation and acquire the Schedule Property. It is pertinent to
submit that the said obligation being expressly mentioned in the
contract, the conclusion arrived by the Hon'ble Tribunal under the
contract all parties assumed joint and several obligation to transfer
the land in favour of Respondent No. 1 is contrary to the evidence
on record and amounts to improper appreciation of evidence on
record. Further, the conclusion arrived by Hon'ble Tribunal is a
wholly unfair and unreasonable and shocks any reasonable
interpretation of law and ought to be set aside. It is submitted that,
a reasonable interpretation of the agreement would show that, it
96 A.P.No.49/2022
& A.P.No.78/2022
was only the respondent No.2 who was obligated to purchase the
schedule property and only upon purchase of such property would
the petitioners and respondent No.2 be in an position to execute
the sale deed in favour of respondent No.2 and such an obligation
placed on respondent No.2 is a contingency which had to
eventualise / happen for the petitioners and respondent No.2 to
execute the sale deed in furtherance to the terms of the agreement
to sell dated 02.11.2011. The petitioners could not have concluded
the contract with the respondent No.1 without respondent No.2
acquiring the property for transfer. Therefore, the conclusion
arrived by the Hon'ble Tribunal that, the agreement to sell is not a
contingency contract under Section 31 and 32 of the Indian
Contract Act, 1872 is a perse and completely erroneous
interpretation of statutory provision and being against the public
policy of India, the same ought to be set aside.
109. The Hon'ble Tribunal has held that, petitioners and
respondent No.2 are jointly and severally liable for providing 80 feet
wide access road at Para 451 (b) and in the event of failure to
provide the said 80 ft. wide access road, the Tribunal has granted
compensatory damages to the tune of Rs.8.164 crores at Para 451
(c). It is submitted that Petitioners have always been ready and
willing to perform its obligations under the contract. The Petitioners
having disbursed the monies in favour of Respondent No. 2, have
performed their obligations under the contract and were awaiting
Respondent No. 2 to complete the acquisition of property. The
Respondent No. 2 having failed to do so, the Hon'ble Tribunal
holding the Petitioners and Respondent No. 2 joint and severally
97 A.P.No.49/2022
& A.P.No.78/2022
liable to provide 80 ft. wide access road is wholly erroneous and
irrational and amounts to perverse interpretation of law. It is
submitted that the 80 ft. wide access road sought to be provided
herein is beyond the 18 Acres and 39 1/2 Guntas which is granted
for specific performance of the Agreement. The obligation to
acquire the land in the Agreement to Sell dated 02.11.2011 was
only on Respondent No. 2. The Agreement does not in any manner
place burden on Petitioners to acquire the property. Therefore, the
grant of 80 ft. wide access road jointly and severally amongst the
Petitioners and Respondent No. 2 and the grant of compensatory
damages in the event of failure to provide the 80 ft. access road
goes beyond the terms of the Agreement to Sell and is patently
illegal and opposed to public policy of India.
110. At Para 451 (d), the Hon'ble Tribunal has held that
Respondent No. 1 would be entitled to receive from Petitioners and
Respondent No. 1, the permission/sanction order of the competent
authority for the change of use of 18 Acres 39% Guntas of land
from the agriculture to commercial/industrial/IT-ITES purposes,
within period of 4 months from the date of execution of the
registered Sale Deed and in the event the Petitioners and
Respondent No. 1 fail to get the permission/sanction order, the
Hon'ble Tribunal at Para 451 (e) has granted a sum of Rs.22.101
Crores as compensatory damages. It is submitted that Petitioners
have always been ready and willing to perform the obligation under
the agreement and had in fact, submitted that Respondent No.1
was entitled to receive specific performance of the Agreement to
Sell to the complete extent of 27 Acres 10 Guntas. In so far as
98 A.P.No.49/2022
& A.P.No.78/2022
receiving permission/sanction order of the competent authority for
the change of use of 18 Acres 39 ½ Guntas of land from the
agriculture to commercial/industrial/IT-ITES purposes, the
Petitioners shall be willing to perform its obligation and convert the
said land to non-agricultural/commercial/IT-ITES purposes.
However, in so far as grant of compensatory damages for failure to
receive the aforesaid conversion order/sanction, the Petitioners
having always been ready to perform its obligation, the grant of
damages by the Hon'ble Tribunal does not arise and is the same
vexatious, irrational, and prejudicial to the rights of Petitioners who
despite being ready and willing to perform their obligation are being
penalized for no fault of their own. The grant of compensatory
damages under Para 451 (e) goes against any notion of justice and
reasonableness, against the public policy of India and is vitiated by
patent illegality.
111. It is submitted that the Hon'ble Tribunal at Para 451 (2)
of the Award has granted a sum of Rs. 33.901 Crores as
compensatory damages jointly and/or severally from the Petitioners
and Respondent No. 2 for the lands admeasuring 8 Acres 29 ½
Guntas for which the relief of specific performance was not granted.
It is submitted that the grant of said damages against Petitioners is
wholly illegal and prejudices the rights of Petitioners despite having
complied with all the terms and obligations under the contract are
burdened with the damages. It is submitted that Petitioners have
always been ready and willing to perform its obligation under the
contract and execute the Sale Deed to the entire of land in favour
of Respondent No. 1 and in furtherance to the same, disbursed the
99 A.P.No.49/2022
& A.P.No.78/2022
monies in favour of Respondent No. 2 who under the contract had
to complete the acquisition of property. The Respondent No. 2
having failed to acquire the property, the Hon'ble Tribunal granting
the damages even against the Petitioners is wholly erroneous and
against the public policy of India. The Petitioners are being
penalized for no liability on their behalf, who have always stated
that they were willing to execute the sale deed in favour of
Respondent No. 1 subject to Respondent No. 2 being able to
acquire the property. The grant of compensatory damages being
without any just and cogent reasons, the same is illegal,
unreasonable, and is against the public policy of India.
112. The Hon'ble Tribunal at Para 451 (3) has granted
Respondent No. 1 the interest payable on the compensatory
damages granted at 451 1(c) and/or 451 1(e) and the same would
be entitled to recover from the Petitioners and Respondent No. 2
jointly and severally. It is submitted that, the Petitioners have
challenged the grant of reliefs under Para 451 1(c) and 451 1(e) of
the Award viz. grant of 80 ft. wide access road and conversion of
land from agriculture to non- agricultural for IT/ITES purposes
jointly and severally from Petitioners and Respondent No. 2. The
grant of interest after providing specific performance of the
Agreement goes well beyond the agreed terms of the Agreement to
Sell dated 02.11.20211. Agreement to Sell provides for payment of
interest on the advance sums only in the event the Respondent No.
1 terminates the Agreement. Respondent No. 1 having never
terminated the Agreement to Sell and further, having received the
relief of specific performance, the grant of interest is beyond any
100 A.P.No.49/2022
& A.P.No.78/2022
reasonable interpretation of the Agreement and is vitiated by patent
illegality. In so far as payment of compensatory damages for failure
to provide the 80 ft. wide access road and conversion of land,
Petitioners have challenged the grant of relief of providing 80ft.
wide access road and conversion of land jointly and/or severally
from Petitioners. Petitioners being always ready and willing to
perform the contract, grant of damages is unreasonable and is
against public policy of India. The grant of interest flowing from the
grant of the said reliefs at the first instance, is also illegal,
unreasonable, and contrary to the fundamental principles of Justice
and is against public policy of India.
113. The Hon'ble Tribunal at Para 451 (5) held that
Respondent No. 1 would be entitled to recover from the Petitioners
and Respondent No. 2 jointly and/or severally, all costs towards
arbitrator fees, Centre administrative charges, travel,
transportation, conveyance, food, accommodation expenses and
other expenses including cost of paper advertisement as per the
order of the Arbitral Tribunal. Further, at Para 451 (6) has held that
Respondent No. 1 would be entitled to recover from the Petitioners
and Respondent No. 2, jointly and/or severally Rs. 6,00,000/-
towards cost of legal fees and expenses of the Arbitration. It is
submitted that the Hon'ble Tribunal at Para 448 and 449 has
arrived at such conclusion observing that since Respondent No. 1
has succeeded in its claims for specific performance and therefore,
being the successful party, it would be entitled for the
aforementioned costs of Arbitration under various heads and
payment of legal fees.
101 A.P.No.49/2022
& A.P.No.78/2022
114. Petitioners have always been willing for specific
performance of the agreement and has pleaded the same in the
Statement of Objections and therefore, going by the rationale
provided by the Hon'ble Tribunal would stand in the same position
as the Respondent No. 1 in so far as seeking for grant of specific
performance of the Agreement to Sell dated 02.11.2011. It is further
submitted that Respondent No. 2 has been unwilling to perform its
obligations under the Agreement which prevented the Petitioners
from executing the sale deed in favour of Respondent No.1. In view
of grant of Specific Performance of Agreement by the Hon'ble
Tribunal, Petitioners contentions have been recognized and
affirmed and therefore, to place the liability on Petitioners to pay the
afore said costs and legal fees of Respondent No. 1 is in
contradiction to the rational provided by the Hon'ble Tribunal while
granting all costs towards arbitrator fees, Centre administrative
charges, travel, transportation, conveyance, food, accommodation
expenses and other expenses including cost of paper
advertisement and the payment of legal fees to the tune of
Rs.6,00,000/- in favour of Respondent No. 1 and the same is
erroneous, perverse, vitiated by patent illegalities and is against
public policy of India. It is submitted that the Hon'ble Tribunal at
Para 451 (7) has held that Respondent No. 1 would be entitled to
recover from the Petitioners and Respondent No. 2, jointly and
severally, the interest payable at the simple rate of 12% p.a. on the
sums awarded amount as per the direction of Respondent No.
3/Hon'ble Tribunal at Para 451 (2), (3), (4), (5) and (6) from the
date of the award until the actual realization. The only provision for
grant of interest at Clause 12.3 under the Agreement to Sell arises
102 A.P.No.49/2022
& A.P.No.78/2022
only in the event Respondent No. 1 terminates the Agreement to
Sell. However, in the present case, Respondent No. 1 has not
chosen to terminate the Agreement but instead sought for specific
performance of the agreement. In view of grant of relief of specific
performance by the Hon'ble Tribunal, the grant of interest in
addition to grant of the reliefs at Para 451 (2), (3), (4), (5) and (6) is
illegal, unreasonable, amounts to perverse interpretation of the
clauses of contract, and contrary to most fundamental principles of
Justice and is against the public policy of India. Petitioners have
also challenged the reliefs granted at Para 451 (2), (3), (4), (5) and
(6) of the award and the grant of interest flowing from the grant of
the said reliefs at the first instance, the same is vitiated by patent
illegalities, opposed to public policy of India and ought to be set
aside. In view of the above stated grounds, it is submitted that the
extent of the Award challenged by the Petitioners is erroneous,
arbitrary, irrational inter alia amounts to perverse interpretation of
the contract between the parties and wholly disregards the purpose
and original intention of the Agreement to Sell dated 02.11.2011. It
is further submitted that the reasoning of the Hon'ble Tribunal is
contrary to settled principles of interpretation of statutes and
reading of contracts and the illegality of the award to the extent
challenged herein is contrary to statutory provisions of the Indian
Contract Act, 1872. The Award is vitiated by patent illegalities and
is against public policy of India and therefore, liable to be set aside.
115. The respondent No.1/claimant filed statement of
objections contending that, the petition filed by the petitioner is not
maintainable either in law or on facts. The petitioners filed this
103 A.P.No.49/2022
& A.P.No.78/2022
petition only in order to attempt to further protract the proceedings
and hence, the claim. It is contended that, as per Section 34 of the
Arbitration and Conciliation Act, 1996, there is a limited scope with
regard to context of jurisdiction of this Court to set aside the award.
As per Section 34 of the said Act, this Court is having limited scope
to set aside the award. The Arbitrator is appointed by the Hon'ble
High Court of Karnataka in CMP No.320/2017 vide order dated
23.11.2018. The respondent Nos.1 and 2 before the Arbitral
Tribunal did not raise any contention that, agreement to sell or the
arbitration agreement contain therein was not valid under law for
the time being in force. Respondent Nos.1 and 3 were represented
through their counsels in the proceedings before the Hon'ble High
Court in CMP No.320/2017. The claim before the Tribunal was for
the relief of specific performance of contract and for damages in
addition thereto. The Arbitral Tribunal provided for specific
performance of agreement to sell in respect of the portion of the
land / schedule property and also provided for damages in respect
of the rest. The respondent No.2 contended that, they were ready
to sell 25 acres 10 guntas of land. The Arbitral Tribunal having
found that out of the said extent, only 18 acres 39 ½ guntas
pertains to the schedule property and therefore, granted specific
performance of agreement to sell in part in terms of the powers
vested with the Arbitral Tribunal in terms of Section 12(4) of the
Specific Relief Act, 1963 and provided for damages for the extent
that remained unperformed. The Tribunal has the power to mould
the relief to the parties and therefore, the award has not dealt with
any dispute not contemplated by or not falling within the terms of
the submission to arbitration, nor does it contain decisions on
104 A.P.No.49/2022
& A.P.No.78/2022
matters beyond the scope of the submission to the arbitration.
There is no contention by the respondent Nos.1 and 3 alleging that,
the award vitiated on account of fraud or corruption.
116. The grounds raised by the respondent Nos.1 and 3
that, the award is in-contravention of fundamental police of Indian
Law and that the same is conflict with the most basic notions of
morality or justice and prayed to set aside the award on these
grounds alone without any merit, baseless and therefore, the award
requires to be confirmed and the present petition requires to be
dismissed. The claimant has led evidence of two witnesses and
got marked documents Ex.C.1 to Ex.C.179 in support of its case.
On the contrary, the respondents did not lead any oral or
documentary evidence and merely produced some documents,
which are identified as Ex.R1/1 to Ex.R1/22, Ex.R2/1 to Ex.R2/27
and Ex.R3/1 to Ex.R3/4. The documents produced by the
respondents are not proved before the Arbitral Tribunal, hence, the
said documents cannot be relied upon.
117. The respondents have not examined any witnesses.
The application filed by the claimant under Sec.33 of the Act
seeking additional award, the rectification of Award etc., came to be
dismissed by the Arbitral Tribunal dated 29.12.2021. The parawise
contents of the statements made against the award are denied by
this respondent / claimant. All other allegations which are not
specifically traversed and which are not admitted either specifically
and which are contrary and inconsistent with the statement of
claim, the rejoinder and present statement of objections, are hereby
105 A.P.No.49/2022
& A.P.No.78/2022
denied as false and entirety and specifically and the respondent
Nos.1 and 3 are put to strict of each and every allegations made
and the respondent No.1/claimant prays to dismiss the petition with
cost.
118. Respondent No.2 M/s.Maverick Property Investments
Private Limited, has filed memo dated 06.11.2023 stating that, the
averments of petition AP No.49/2022, be adopted as objections to
the present arbitration petition. Hence, the same is considered as
objections to this petition.
119. Records in A.C.No.23/2019 are secured.
120. Heard the arguments from both the sides in both the
cases.
121. Perused the entire materials on record.
122. The learned counsel for the petitioner in
A.P.No.49/2022 and respondent No.2 in A.P.No.78/2022, has relied
upon the following rulings:
1. Judgment of the Hon'ble Supreme Court in Curative
Petition (C) Nos.108-109 of 2022 dated 10.04.2024.
2. SCC Online Bom 834 in the case of Board of Cricket
Control of India Vs Deccan Chronicle Holdings Ltd.
3. 2021 SCC OnLine SC 508 in the case of PSA Sical
Terminals (P) Ltd., Vs Board of Trustees of
V.O.Chidambranar Port Trust Tuticorin.
4. (2022) 4 SCC 463 in the case of Indian Oil Corporation
Ltd., Vs Shree Ganesh Petroleum Rajgurnagar.
106 A.P.No.49/2022
& A.P.No.78/2022
5. NHAI (2019) 15 SCC 131 in the case of Ssangyong
Engineering and Construction Company Ltd.
6. 2019 (20) SCC 1 in the case of Dyna Technologies Pvt.
Ltd., Vs Crompton Greaves Ltd.
7. (2007) 2 SCC 453 in the case of Ramnath International
Construction Co. Vs Union of India.
8. (1999) 8 SCC 122 in the case of Sail Vs J.C.Budharaja.
9. AIR 2020 SC 2488 in the case of Patel Engineering
Limited Vs North-eastern Electric Power Corporation
Ltd.
10. (2015) 3 SCC 49 in the case of Associate Builders Vs
Delhi Development 31 Authority.
11. Judgment of the Hon'ble High Court of Madras in
O.S.No.298/2019 dated 26.07.2022 in the case of
Chennai Water Desalination Ltd., Vs Chennai
Metropolitan Water Supply and Sewerage Board.
12. (2000) 7 SCC 379 in the case of Surjit Kaur Vs,
Naurata Singh and another.
13. 2008 (2) Mh.L.J.542 in the case of Hindustan
Petroleum Corporation Ltd., Vs Batliboi Environmental
Engineers Ltd.
14. AIR 2019 SC 1280 in the case of Urvashi Agarwal
(since deceased) through LRs Vs Kushagra Ansal
(successor in interest) and others.
15. (1997) 2 SCC 611 in the case of T.L.Muddykrishna and
another Vs Lalitha Ramachandra Rao.
16. (2006) 3 SCC 634 in the case of Gunwantbhai
Mulchand Shah and others Vs Anton Elis Farel and
others.
17. (2015) 8 SCC 390 in the case of Fatehji Company and
another Vs LM Nagpal and others.
18. (2012) 2 Kant LJ 641 (Division Bench)
19. (2015) 5 SCC 223 in the case of Rathnavathi and
another Vs Kavita Ganashamdas.
107 A.P.No.49/2022
& A.P.No.78/2022
20. (2019) 13 SCC 372 in the case of Urvashiben and
another Vs Krishnakanth Manuprasad Trivedi.
21. 1993 SCC OnLine Guj. 70 in the case of Somanhai
Kanjibhai Patel Vs Abbasbhai Jafarbhai Daginawala
and others.
22. 1962 SCC OnLine Ker. 114 in the case of Piraumu
Chellamma of Kuzhivilakayhu Veedu Vs
Ramachandran Pillai and others.
23. (2021) 9 SCC 1 in the case of National Highways
Authority of India Vs M.Hakeem and another.
24. (2023) 15 Supreme Court Cases 472 in the case of
Larsen Air Conditioning and Refrigeration Company
Vs Union of India and others.
123. The learned counsel for the petitioner No.1 in
A.P.No.78/2022 and respondent No.2 in A.P.No.49/2022, has relied
upon the following rulings:
1. (2007) 4 SCC 697 in the case of Food Corporation of India
Vs Chandru Construction and another.
2. (2022) 4 SCC 463 in the case of Indian Oil Corporation
Limited Vs Shree Ganesh Petroleum.
3. (2015) 3 SCC 49 in the case of Associate Builders Vs DDA.
4. 2022 SCC Online AP 72 in the case of Rashtriya Ispat
Nigam Limited Vs Balaji Coke Industry Pvt. Ltd.
5. 2022 SCC Online Cal 2299 in the case of Steel Authority of
India Vs Vizag Seaport Pvt. Ltd.
6. (2020) 5 SCC 164 in the case of South East Asia Marine
Engineering and Construction Vs Oil India.
7. (1990) 1 SCC 731 in the case of Bihar State Electricity
Board Vs Green Rubber Industries.
8. 2022 SCC Online SC 1605 in the case of Food Corporation
of India Vs Abhijit Paul.
108 A.P.No.49/2022
& A.P.No.78/2022
9. 2023 SCC Online SC 1208 in the case of Batliboi
Environmental Engineers Limited Vs Hindustan Petroleum
Corporation Limited.
10. 2010(1) Mh.L.J.547 in the case of RS Jiwani Vs Ircon
International Ltd.
11. (2011) 5 SCC 758 in the case of J.G.Engineers Pvt. Ltd., Vs
Union of India.
12. 2021 SCC Online Ker 5197 in the case of Navyuga
Engineering Company Ltd., Vs Union of India.
13. 2023 SCC Online Del 160 in the case of Union of India Vs
Alcon Builders.
14. 2023 SCC Online Del 5183 in the case of National
Highways Authority of India Vs Trichy Tanjavur
Expressway Ltd.
15. 2018 SCC Online Mad 2363 in the case of M/s. Green
Vistas Property Development (Private) Limited and another
Vs Mr.Justice Doraiswamy Raju.
16. 2023 SCC Online 8944 in the case of MBL Infrastructures
Vs Delhi Metro Rail Corporation.
17. (2000) 5 SCC 488 in the case of Arnit Das Vs State of Bihar.
18. AIR 1954 TC 10 in the case of T.V.Kochuvareed and
another Vs P. Mariappa Gounder and others.
19. (2021) 3 Supreme Court Cases 308 in the case of Anglo
American Metallurgical Coal Pvt. Ltd., Vs MMTC Limited.
20. (2003) 5 SCC 707 in the case of Oil and Natural Gas
Corporation Ltd., Vs Saw Pipes.
21. (2008) 13 SCC 80 in the case of Delhi Development
Authority Vs R.S.Sharma and Company.
22. (2019) 15 SCC 131 in the case of Ssangyong Engineering
and Construction Company Limited Vs National Highways.
109 A.P.No.49/2022
& A.P.No.78/2022
23. 2021 SCC Online SC 508 in the case of PSA Sical
Terminals Vs Board of Trustees.
24. (2019) 4 SCC 163 in the case of MMTC Limited Vs
Vedanta Limited.
25. (2019) 20 SCC 1 in the case of Dyna Technologies Vs
Crompton Greaves.
124. The learned counsel for the respondent No.3 in
A.P.No.49/2022 and petitioner No.2 in A.P.No.78/2022, has relied
upon the following rulings:
1. 2023 SCC OnLine Del 8044 in the case of MBL
Infrastructures Limited Vs Delhi Metro Rail Corporation.
2. (2021) 9 SCC in the case of National Highways Authority
of India Vs M.Hakeem and another.
125. The learned counsel for the respondent No.1 in both
A.P.No.49/2022 and A.P.No.78/2022 has relied upon the following
rulings:
1. (2022) 1 SCC 131 in the case of Delhi Airport Metro
Express Pvt. Ltd., Vs Delhi Metro Rail Corporation Ltd.
2. (2020) 7 SCC 167 in the case of Patel Engineering Limited
Vs North Eastern Electric Power Corporation Ltd.
3. (2019) 15 SCC 131 SC in the case of Ssangyong
Engineering and Construction Company Limitd Vs NHAI.
4. (2022) 4 SCC 116 SC in the case of UHL Power Company
Limited Vs State of Himachal Pradesh.
5. (2023) 9 SCC 85 SC in the case of Konkan Railway
Corporation Limited Vs Chenab Bridge Project
Undertaking.
110 A.P.No.49/2022
& A.P.No.78/2022
6. (2015) 3 SCC 49 in the case of Associate Builders Vs Delhi
Development Authority.
7. 2023 SCC OnLine Bom 97; (2023) Bombay High Court in
the case of Thomas Cook (Indai) Limited Vs Red Apple
Chandrarat Travel.
I have gone through the rulings.
126. Based on the contentions of the parties, points that
arise for my consideration are as under:
1. Whether the petitioner in A.P.No.49/2022 has
made out grounds for interference of this Court in
the impugned award dated 22.03.2021 in
A.C.No.23/2019 passed by the Arbitral Tribunal ?
2. Whether the petitioners in A.P.No.78/2022 have
made out grounds for interference of this Court in
the impugned award dated 22.03.2021 in
A.C.No.23/2019 passed by the Arbitral Tribunal ?
3. What order ?
127. My answer to the above points are as under :-
Point Nos.1 & 2 :- In the Negative,
Point No.3 :- As per final order;
for the following :-
REASONS
128. POINT Nos.1 & 2: Since both the points are
interconnected with each other, hence, they are taken together
for discussion in order to avoid repetition of facts.
111 A.P.No.49/2022
& A.P.No.78/2022
129. In this case, there is no dispute regarding the profile of
the parties. On 09.04.2011, the memorandum of understanding
was entered between the respondent Nos.1 and 2. The
respondent No.2 was to acquire 104 acres and 2 guntas of land in
Tubarahalli and Siddapura Villages, Varthur Hobli, Bengaluru East.
The respondent No.1 was to develop the said land. Claimant being
the Indian Multinational Information Technology (IT) Company
providing IT services worldwide including India, was planning to
establish a Special Economic Zone near Whitefield, Bengaluru and
was searching for suitable land.
130. The claimant approached the respondent No.1 in
search of land to the extent of 35 acres in and around Whitefield,
Bengaluru. As per the MOU dated 01.07.2011, the respondent
No.2 permitted the respondent No.1 to sell 35 acres of land out of
100 acres, to the claimant through respondent No.1. On
01.07.2011, the respondent No.2 entered into MOU with the
respondent No.3, to sell 35 acres of land for consideration of Rs.4.5
Crore per acre. On the same day, the respondent No.3 entered
into MOU with the respondent No.1 to sell the aforesaid 35 acres of
land for consideration of Rs.6.5 Crore per acre. On 15.07.2011, the
respondent No.1 entered into MOU with the claimant to sell
aforesaid 35 acres of land for consideration of Rs.7.17 crore per
acre. On 02.11.2011, the claimant and respondent Nos.1 to 3
entered into agreement to sell agreeing to sell in respect of 27
acres 10 guntas of land out of 35 acres of land in favour of claimant
for total sale consideration of Rs.195,38,25,000/- payable to the
112 A.P.No.49/2022
& A.P.No.78/2022
respondent No.1 on behalf of the respondent No.2 and 3, out of
which, payment of Rs.58,61,47,500/- was paid at the time of
execution of the agreement of sale and remaining payment was to
be made subsequently.
131. On perusal of the available material and the impugned
award, there is no dispute regarding execution of agreement to sell
dated 02.11.2011 and also there is no dispute regarding payment of
30% of advance sale consideration i.e., Rs.58,61,47,500/- by the
claimant to the respondents after the date fixed for execution of the
sale deed.
132. Learned counsel for petitioner in A.P.No.49/2022 / 2nd
respondent in A.P.No.78/2022 / 2nd respondent in A.C. No.23/2019
has argued that, as per Clause-3 of the agreement to sell, stipulated
time for execution of registration of sale deed was to be completed
on or before 30.11.2011 and necessary change in land use under the
Karnataka Town and Country Planning Act, 1961 was to be
completed by 31.01.2012. Learned counsel further argued that, this
petitioner / 2nd respondent was not the owner of the land and he was
acquiring the land, in the mean time, this claimant / TCSL published
in news regarding proposal of establishment of SEZ in the said area
and by knowing which, the land owners stopped selling their lands,
thinking that value of their lands would increase, if SEZ established,
hence, because of which, he could not procure the land and apart
from this, the project of this petitioner i.e., R2 in AC No.23/19, who
was establishing project in the said area, also hampered, due to
which, he suffered loss. Further argued that, it was nobodies' case,
but the Hon'ble Arbitrator has created new contract and awarded
113 A.P.No.49/2022
& A.P.No.78/2022
specific performance for portion of the land and also awarded
damages for remaining land, which is patent illegality in the award.
Learned counsel has further argued that, this award is barred by
limitation and violation of law of limitation would go to the root of the
case. The learned counsel has further argued that, as prayed by
petitioners in A.P.No.78/2022, award cannot be set aside partially.
The Court has to confirm the award or set aside the award in entirety.
Hence, prayed to set aside the award.
133. Learned counsel for the petitioner in A.P.No.78/2022 /
respondent No.2 in A.P.No.49/2022 / respondent No.1 in
A.C.No.23/2019 argued that, this petitioner No.1 was not the owner
of the land nor he was procuring the land, but he was a facilitator
through respondent No.3 in execution of the sale deed in favour of
the claimant, hence, the award to the extent of directing this
petitioner / respondent No.1 in A.C.No.23/2019 to pay damages to
the claimant is bad in law. Hence, he is seeking to set aside the
award partially. Learned counsel for petitioner No.2 in
A.P.No.78/2022 / respondent No.3 in A.C.No.23/2019 has also
argued that, the award to the extent of directing this petitioner
No.2 / respondent No.3 in A.C.No.23/2019 to pay damages to the
claimant is not sustainable and liable to be set aside.
134. Learned counsel for the claimant in A.C.No.23/2019 /
respondent No.1 in both A.P.No.49/2022 and A.P.No.78/2022, has
argued that, claimant TCSL is IT sector company in India having its
business worldwide, was planning to establish SEZ project in and
around Whitefield, Bengaluru and was searching suitable land for
114 A.P.No.49/2022
& A.P.No.78/2022
the same. The claimant / TCSL also applied to the Government of
Karnataka for permission to establish SEZ. Respondent Nos.1 to 3
in AC No.23/2019 represented the claimant / TCSL stating that,
they have already acquired land and ready to sell the required land
to claimant/ TCSL. Claimant / TCSL being a reputed company in
software technology and it is worth in lakhs of crores. As admitted
by other side that, there was an agreement to sell dated 02.11.2011
regarding sale of 27 acres 10 guntas of land in Tubarahalli Village
and Siddapura Villages, for total sale consideration of
Rs.195,38,25,000/- and paid 30% of the sale consideration
amounts to Rs.58,61,47,500/- as advance amount since the
respondents represented the TCSL that, this extent of land is
readily available and it is converted, hence, short time for execution
of the sale deed was fixed as 30.11.2011. But the respondents
failed to perform their part of contract and went on making e-mail
correspondences and only after expiry of the period dated
30.11.2011, the respondents have received and encashed the 30%
of the sale consideration amount of Rs.58,61,47,500/- as advance
payment from the TCSL and they went on making corresponds
regarding this sale transaction and now, they are stating that, this is
a time barred claim, which is not believable either on facts or on
law. The learned arbitrator after considering the facts and
circumstances of the case, material and evidence produced by the
parties has passed the well reasoned award. The petitioners in
both the petitions failed to show as to how the award is in conflict
with public policy of India or interference of this court is required.
As per Sec.34 of the Arbitration and Conciliation Act, 1996 and
amended Act, 2015, there is a very limited scope for this Court to
115 A.P.No.49/2022
& A.P.No.78/2022
interfere with the arbitral award and this Court cannot act as
appellate Court and appreciate the evidence. The petitioners have
not made out any grounds for interference by this court in the
impugned award to allow these petitions, hence, prays to dismiss
the petitions by confirming the award.
135. In this case, there is no dispute regarding agreement
to sell dated 02.11.2011 entered among the parties regarding sale
of 27 acres 10 guntas of land in favour of the TCSL. As per the
said agreement to sell, the registration of the sale deed was to be
completed on or before 30.11.2011 and thereafter, change in the
land use was to be completed on or before 31.01.2012. The initial
obligation on the part of the claimant i.e., TCSL was to effect the
payment of advance sale consideration equivalent to 30% of the
contract value subject to compliance of terms and conditions of
Escrow. Thereafter, respondent No.1 addressed communication on
20.02.2012 requesting for release of advance payment, for which,
the claimant demanded title deeds in respect of 11 acres 21 guntas
of land already procured by the respondent No.1. Accordingly, the
respondent No.1 complied and produced the original documents on
21.02.2012. The respondents in AC No.23/2019 have received
payment of advance amount of Rs.58,61,47,500/- on 21.02.2012
through cheque, which is not in dispute. The respondents received
the payment after the date fixed for performance of the contract,
under these circumstances, it shows that, though a time was
mentioned in the agreement of sale to execute the sale deed but,
due to conduct of parties this clause was waived and in fact no time
was fixed for performance of the contract. If the respondents stick
116 A.P.No.49/2022
& A.P.No.78/2022
on to the clause of time for execution of sale deed, after expiry of
the same, they should not have received the payment. Thus,
agreement to sale was subsisting even on receipt of payment of
30% of the sale consideration on 21.02.2012 and it did not come to
end on 02.11.2011. The said cheque is encashed by respondent
No.1 in A.C.No.23/2019 only after expiry of time mentioned in the
agreement of sale. Thus, though the date for specific performance
was fixed, but by the conduct of the parties, this agreement to sell
fall within second part of Article 54 of the Limitation Act. As per
Article 54 of the Limitation Act - for specific performance of a
contract -three years from the date fixed for the performance, or, if
no such date is fixed, when the plaintiff has notice that performance
is refused.
136. The argument of these petitioners that, due to the fault
on the part of the respondent No.1 TCSL that, it failed to maintain
confidentiality and published the news of setting up of SEZ in the
said area, due to which, the land owners refused to sell their lands
is not sustainable because, there was no agreement between the
parties that, the claimant is barred from publishing the news of
setting up of SEZ in the area, hence, this argument of the petitioner
is not sustainable.
137. It is well settled principle of law that, this Court is not
sitting as Appellate Court on the impugned award. Scope of this
Court is confined to Section 34 of Arbitration and Conciliation Act.
The Hon'ble Supreme Court in the ruling reported in (2022) 1
Supreme Court Cases 131 in the case of Delhi Airport Metro
117 A.P.No.49/2022
& A.P.No.78/2022
Express Private Limited Vs Delhi Metro Rail Corporation Limited,
wherein, it is held that,
24. An amendment was made to Section 34 of the 1996 Act by
the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter "the
2015 Amendment Act"). A perusal of the Statement of Objects and
Reasons of the 2015 Amendment Act would disclose that the
amendment to the 1996 Act became necessary in view of the
interpretation of the provisions of the 1996 Act by Courts in certain cases
which had resulted in delay of disposal of arbitration proceedings and
increase in interference by Courts in arbitration matters, which had the
tendency to defeat the object of the 1996 Act. Initially, the matter was
referred to the Law Commission of India to review the shortcomings in
the 1996 Act in detail. The Law Commission of India submitted its 176 th
Report, recommending various amendments to the 1996 Act. However,
the Justice Saraf Committee on Arbitration constituted by the
Government, was of the view that the proposed amendments gave room
for substantial intervention by the court and were also contentious.
Thereafter, on reference, the Law Commission undertook a
comprehensive study of the amendments proposed by the Government,
keeping in mind the views of the Justice Saraf Committee and other
stakeholders. The 246th Report of the Law Commission was submitted on
5-8-2014. Acting on the recommendations made by the Law Commission
in its 246th Report, amendments by way of the 2015 Amendment Act
were made to several provisions of the 1996 Act, including Section 34.
34. Application for setting aside arbitral award - (1) Recourse
to a Court against an arbitral award may be made only by an
application for setting aside such award in accordance with sub-
section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if--
(a) the party making the application [establishes on the basis of
the record of the arbitral tribunal that]--
(i) a party was under some incapacity, or
(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 the time being in force; or
118 A.P.No.49/2022
& A.P.No.78/2022
(iii) the party making the application was not given
proper notice of the appointment of an arbitrator or of the
arbitral proceedings or was otherwise unable to present his
case; or
(iv) the arbitral award deals with a dispute not
contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on matters
beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so submitted, only
that part of the arbitral award which contains decisions on
matters not submitted to arbitration may be set aside; or
(v) 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 this Part from which the parties cannot derogate, or, failing
such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being in
force, or
(ii) the arbitral award is in conflict with the public policy
of India.
[Explanation 1.--For the avoidance of any doubt, it is clarified that an
award is in conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or
corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian
law; or
(iii) it is in conflict with the most basic notions of morality or
justice.
[Explanation 2.--For the avoidance of doubt, the test as to whether
there is a contravention with the fundamental policy of Indian law
shall not entail a review on the merits of the dispute.]
119 A.P.No.49/2022
& A.P.No.78/2022
[(2A) An arbitral award arising out of arbitrations other than
international commercial arbitrations, may also be set aside by the
Court, if the Court finds that the award is vitiated by patent illegality
appearing on the face of the award:
Provided that an award shall not be set aside merely on the
ground of an erroneous application of the law or by reappreciation of
evidence.
26. A cumulative reading of the UNCITRAL Model Law and
Rules, the legislative intent with which the 1996 Act is made, Section 5
and Section 34 of the 1996 Act would make it clear that judicial
interference with the arbitral awards is limited to the grounds in Section
34. While deciding applications filed under section 34 of the Act, Courts
are mandated to strictly act in accordance with and within the confines of
Section 34, refraining from appreciation or reappreciation of matters of
fact as well as law. (See Uttarakhand Purv Sainik Kalyan Nigam Ltd. V.
Northern Coal Field Ltd., Bhaven Construction v. Sardar Sarovar Narmada
Nigam Ltd. and Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Sarans.)
27. For a better understanding of the role ascribed to Courts in
reviewing arbitral awards while considering applications filed under
Section 34 of the 1996 Act, it would be relevant to refer to a judgment of
this Court in Ssangyong Engg. & Construction Co. Ltd. v. NHAI wherein R.F.
Nariman, J. has in clear terms delineated the limited area for judicial
interference, taking into account the amendments brought about by the
2015 Amendment Act. The relevant passages of the judgment in
Ssangyong are noted as under: (SCC pp. 169-71, paras 34-41)
"34. What is clear, therefore, is that the expression "public policy
of India", whether contained in Section 34 or in Section 48, would now
mean the "fundamental policy of Indian law" as explained in paras 18 and
27 of Associate Builders³ i.e. the fundamental policy of Indian law would
be relegated to "Renusagar" understanding of this expression. This would
necessarily mean that Western Geco expansion has been done away
with. In short, Western Geco, as explained in paras 28 and 29 of Associate
120 A.P.No.49/2022
& A.P.No.78/2022
Builders, would no longer obtain, as under the guise of interfering with
an award on the ground that the arbitrator has not adopted a judicial
approach, the Court's intervention would be on the merits of the award,
which cannot be permitted post amendment. However, insofar as
principles of natural justice are concerned, as contained in Sections 18
and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of
challenge of an award, as is contained in para 30 of Associate Builders.
35. It is important to notice that the ground for interference
insofar as it concerns "interest of India" has since been deleted, and
therefore, no longer obtains. Equally, the ground for interference on the
basis that the award is in conflict with justice or morality is now to be
understood as a conflict with the "most basic notions of morality or
justice". This again would be in line with paras 36 to 39 of Associate
Builders, as it is only such arbitral awards that shock the conscience of
the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to
mean firstly, that a domestic award is contrary to the fundamental policy
of Indian law, as understood in paras 18 and 27 of Associate Builders, or
secondly, that such award is against basic notions of justice or morality as
understood in paras 36 to 39 of Associate Builders. Explanation 2 to
Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by
the Amendment Act only so that Western Geco, as understood in
Associate Builders, and paras 28 and 29 in particular, is now done away
with."
As per Section 34 of the Act, there should be patent illegality
in the award i.e., on the face of the award, there should be illegality
appearing, but in this case, as discussed above, by conduct of the
parties, they have made this agreement to sell fall within Part-2 of
Article 54 of the Limitation Act. Hence, it cannot be held that, it is a
patent illegality appearing on the face of the award.
121 A.P.No.49/2022
& A.P.No.78/2022
138. Further, the Hon'ble Apex Court in the above said
ruling (2022) 1 Supreme Court Cases 131 in the case of Delhi
Airport Metro Express Private Limited Vs Delhi Metro Rail
Corporation Limited, it is held that;
28. This Court has in several other judgments interpreted Section
34 of the 1996 Act to stress on the restraint to be shown by Courts while
examining the validity of the arbitral awards. The limited grounds
available to Courts for annulment of arbitral awards are well known to
legally trained minds. However, the difficulty arises in applying the well-
established principles for interference to the facts of each case that come
up before the Courts. There is a disturbing tendency of Courts setting
aside arbitral awards, after dissecting and reassessing factual aspects of
the cases to come to a conclusion that the award needs intervention and
thereafter, dubbing the award to be vitiated by either perversity or patent
illegality, apart from the other grounds available for annulment of the
award. This approach would lead to corrosion of the object of the 1996
Act and the endeavors made to preserve this object, which is minimal
judicial interference with arbitral awards. That apart, several judicial
pronouncements of this Court would become a dead letter if arbitral
awards are set aside by categorising them as perverse or patently illegal
without appreciating the contours of the said expressions.
29. Patent illegality should be illegality which goes to the root of
the matter. In other words, every error of law committed by the Arbitral
Tribunal would not fall within the expression "patent illegality". Likewise,
erroneous application of law cannot be categorised as patent illegality. In
addition, contravention of law not linked to public policy or public
interest is beyond the scope of the expression "patent illegality". What is
prohibited is for Courts to reappreciate evidence to conclude that the
award suffers from patent illegality appearing on the face of the award,
as Courts do not sit in appeal against the arbitral award. The permissible
grounds for interference with a domestic award under Section 34(2-A) on
the ground of patent illegality is when the arbitrator takes a view which is
122 A.P.No.49/2022
& A.P.No.78/2022
not even a possible one, or interprets a clause in the contract in such a
manner which no fair-minded or reasonable person would, or if the
arbitrator commits an error of jurisdiction by wandering outside the
contract and dealing with matters not allotted to them. An arbitral award
stating no reasons for its findings would make itself susceptible to
challenge on this account. The conclusions of the arbitrator which are
based on no evidence or have been arrived at by ignoring vital evidence
are perverse and can be set aside on the ground of patent illegality. Also,
consideration of documents which are not supplied to the other party is a
facet of perversity falling within the expression "patent illegality".
30. Section 34(2)(b) refers to the other grounds on which a court
can set aside an arbitral award. If a dispute which is not capable of
settlement by arbitration is the subject-matter of the award or if the
award is in conflict with public policy of India, the award is liable to be set
aside. Explanation (1), amended by the 2015 Amendment Act, clarified
the expression "public policy of India" and its connotations for the
purposes of reviewing arbitral awards. It has been made clear that an
award would be in conflict with public policy of India only when it is
induced or affected by fraud or corruption or is in violation of Section 75
or Section 81 of the 1996 Act, if it is in contravention with the
fundamental policy of Indian law or if it is in conflict with the most basic
notions of morality or justice.
31. In Ssangyong, this Court held that the meaning of the
expression "fundamental policy of Indian law" would be in accordance
with the understanding of this Court in Renusagar Power Co. Ltd. v.
General Electric Co. In Renusagar, this Court observed that violation of
the Foreign Exchange Regulation Act, 1973, a statute enacted for the
"national economic interest", and disregarding the superior Courts in
India would be antithetical to the fundamental policy of Indian law.
Contravention of a statute not linked to public policy or public interest
cannot be a ground to set at naught an arbitral award as being discordant
with the fundamental policy of Indian law and neither can it be brought
within the confines of "patent illegality" as discussed above. In other
123 A.P.No.49/2022
& A.P.No.78/2022
words, contravention of a statute only if it is linked to public policy or
public interest is cause for setting aside the award as being at odds with
the fundamental policy of Indian law. If an arbitral award shocks the
conscience of the court, it can be set aside as being in conflict with the
most basic notions of justice. The ground of morality in this context has
been interpreted by this Court to encompass awards involving elements
of sexual morality, such as prostitution, or awards seeking to validate
agreements which are not illegal but would not be enforced given the
prevailing mores of the day.
139. On going through the rulings submitted in this case, it
shows that, it is settled principle that, Courts should not interfere
with the arbitral award in a casual and cavalier manner. The mere
possibility of an alternative view on facts or interpretation of the
contract does not entitle Courts to reverse the findings of the
arbitral tribunal. The Hon'ble Apex Court in the ruling reported in
(2023) 9 Supreme Court Cases 85 in the case of Konkan Railway
Corporation Limited Vs. Chenab Bridge Project Undertaking, it is
held that,
19. Therefore, the scope of jurisdiction under Section 34 and
Section 37 of the Act is not akin to normal appellate jurisdiction. It is
well-settled that courts ought not to interfere with the arbitral award in a
casual and cavalier manner. The mere possibility of an alternative view
on facts or interpretation of the contract does not entitle courts to
reverse the findings of the Arbitral Tribunal.
140. In this case, admittedly, the parties entered into
agreement to sell dated 02.11.2011. Thereafter, as discussed above,
after the time stipulated for execution of the sale deed, respondents
have received payment from the claimant TCSL towards performance
124 A.P.No.49/2022
& A.P.No.78/2022
of part of the contract and thereafter, they went on making email
correspondence and ultimately, respondents refused to perform part
of the contract. As per the arbitration clause, claimant TCSL
approached the Hon'ble High Court for appointment of Arbitrator and
presented this petition. The Hon'ble Arbitrator by following due
procedure has passed the award. The petitioners in A.P.No.78/2022
have contended that, they were not the owners of the land nor they
were procuring the land, hence, awarding damages against them is
illegal and apparent error. These petitioners were also parties to the
agreement to sell, they have received part of the consideration
amount. Now, they cannot state that, there was no any liability
against them and they are not liable to pay damages. Portion of the
award making these petitioners liable to pay damages cannot be
termed as patently illegal or against the Public Policy of India.
141. In this case, another important aspect is that, claimant
has led both oral and documentary evidence. Respondents in the
arbitration case, for the reasons best known to them, have not led any
oral evidence except getting the documents marked. Though, they
filed affidavits of 2 witnesses in lieu of examination-in-chief on behalf
of respondents before Arbitral Tribunal, but they withdrawn the said
affidavits. There is no oral evidence from the respondents to prove
their pleadings. It is the basic principle that, plead and prove. The
respondents have pleaded their case, but they have not proved the
same as per the procedure known to law.
142. After amendment to Section 34 of the Arbitration and
Conciliation Act, 1999, the scope of interference by the Court is more
125 A.P.No.49/2022
& A.P.No.78/2022
restricted. The petitioners had taken same grounds and defence
before the Arbitral Tribunal, which have taken before this Court. The
Tribunal has reached the conclusion, which does not call for any
interference under Sec.34 of the Arbitration and Conciliation Act as
the award in question does not violate any public policy nor is patently
illegal. The petitioners have not made out any grounds to call for
interference by this Court to set aside the award. The decisions relied
upon by the parties clearly show that, the interference under Section
34 of Arbitration and Conciliation Act, by this Court is highly restricted.
The award passed by the Arbitral Tribunal is based on the facts urged
by the parties and the findings based on the fact cannot be interfered
under Sec.34 of Arbitration and Conciliation Act.
143. As discussed above, admittedly, there was agreement to
sell among the parties. The learned Arbitrator has awarded specific
performance to the extent of lands available with the respondents and
awarded damages regarding the remaining lands mentioned in the
agreement to sell. Such an award cannot be termed as opposed to
Public Policy of India or patently illegal. Looking to the facts and
circumstances of the case, the award passed by the learned Arbitrator
do not suffer from any infirmity or illegality. Hence, in the considered
opinion of this Court, in view of the scope available to this Court under
Sec.34 of the Arbitration and Conciliation Act and in the light of the
judgments of the Hon'ble Supreme Court referred above, this Court
do not find any good grounds to interfere with the reasoned award
passed by the learned Arbitrator. Accordingly, I answer point Nos.1
and 2 are in the Negative.
126 A.P.No.49/2022
& A.P.No.78/2022
144. POINT NO.3: In view of my aforesaid discussions, I
proceed to pass the following: -
ORDER
Petition in A.P.No.49/2022 filed by the
petitioner under Sec.34 of the Arbitration and
Conciliation Act, is dismissed with cost.
Petition in A.P.No.78/2022 filed by the
petitioners under Sec.34 of the Arbitration and
Conciliation Act, is dismissed with cost.
Award dated 22.03.2021 passed by the
Arbitrator in A.C.No.23/2019 is confirmed.
Keep the original judgment in
A.P.No.49/2022 and copy of the same in
A.P.No.78/2022.
Office is directed to send back the
original records in A.C.No.23/2019 to the
Arbitral Tribunal along with copy of this
judgment.
(Dictated to the Stenographer-III directly on Computer, typed by her and
then pronounced by me in the open Court on this the 16th day of January 2025.)
(B.P.Devamane)
I Addl. City Civil & Sessions Judge,
Bengaluru.
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