Agra Development Authority, Agra ... vs Smt. Amarjeet Pannu
2015 Latest Caselaw 3112 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Court No. - 34
 

 
Case :- FIRST APPEAL FROM ORDER No. - 1310 of 2008
 

 
Appellant :- Agra Development Authority, Agra Thru' Secretary
 
Respondent :- Smt. Amarjeet Pannu
 
Counsel for Appellant :- Mahendra Pratap,Sanjay Kumar Om
 
Counsel for Respondent :- K.R.Singh, Kunal Ravi Singh, O.P. Mishra, R.K. Singh
 

 
Hon'ble Sudhir Agarwal,J.

Hon'ble Shamsher Bahadur Singh,J.

1. This appeal under Section 39 (vi) of Arbitration Act, 1940 (hereinafter referred to as "Act 1940") has arisen from the judgement and order dated 27.01.2006 passed by Sri Grish Kumar Vaishya, Civil Judge (Sr. Div.), Agra (hereinafter referred to as Court below) in Civil Misc. Case Nos. 37 of 1997 (Smt. Amarjeet Pannu Vs. Agra Development Authority, Jaipur House, Agra through Secretary) and 38 of 1997 (Agra Development Authority, Agra through Secretary Vs. Smt. Amarjeet Pannu), rejecting objections filed by appellant against award dated 21.05.1997 and making said award Rule of the Court.

2. Smt. Amarjeet Pannu and Ldr. L.S. Pannu, Air Force Station, Kheria, Agra applied for allotment of certain commercial space at Sanjay Place commercial Complex, Agra on 08.09.1980 and deposited Rs. 78,000/- and 60,000/- for 8 units, i.e 4 units in basement and 4 units at third Floor. The Agra Development Authority (hereinafter referred to as A.D.A.) allotted aforesaid units i.e. 4 in basement and 4 on 3rd Floor in Sanjay Place Commercial Complex to Smt. Amarjeet Pannu and her husband Wing Commander L.S. Pannu, Air force Station, Kheria, Agra on 04.01.1981. Notice informing them about allotment and mode of payment was sent on 04.02.1981. As per allotment order, tentative cost of 4 units in basement was Rs. 3,08,000/- and 4 units on third Floor was Rs. 2,40,000/-. Allottees were supposed to pay 25% of the cost of units at the time of allotment and further 25% of cost 15 days before taking possession and balance 50% within four years in half yearly installments with interest at the rate of 16% per annum. Between 1980-1981 the said allottees further deposited a sum of Rs. 50,000/- and therefore, total deposit made by them was Rs. 1,88,000/- (78,000/- +60,000/- + 50,000/-). No further payment was made by allottees. A.D.A. issued notice on 15.01.1987, requiring allotttees to show cause why allotment made be not cancelled. Ultimately, allotment was cancelled on 24.04.1987. On 05.09.1989, appellant A.D.A., however, issued fresh notice proposing revival of allotment subject to condition of deposit of Rs. 4,17,161/- by the said allottees. The allottees, however, did not make any payment. They raised a dispute and made an application in the court below under Section 20 of Act, 1940 on 01.01.1990 for appointment of Arbitrator. The appellant though contested the application but Civil Judge appointed Sri S.C. Mangla as Arbitrator.

3. The statement of claim was filed by allottees on 03.04.1997 before Arbitrator, making following claims:-

i. Refund of Rs. 52,000/- deposited by allottee, which was illegally demanded by respondent and Rs. 8,08,474/- alongwith interest at the rate of 18% per annum with quarterly rest, i.e. up to 23.03.1997 and future interest at the same rate as also.

ii. Refund of Rs. 1,38,000/-(78,000/- + 60,000/-) alongwith interest at the rate of 18% per annum with quarterly rest , which comes to Rs. 25,39,812/- up to 23.03.1997.

iii. Loss of income towards rent etc. at the rate of Rs. 6,000/- per month in respect of basement units from 8.9.1981, amounting to Rs. 67,53,329/- alongwith interest at the rate of 18% per annum with quarterly rest till the date of payment.

iv. Rent @ Rs. 1,000/- per month in respect of the units at 3rd Floor alongwith interest which comes to Rs. 45,72,598/-.

v. Cost and damages in contesting arbitration proceedings to the extent of Rs. 80,000/-.

vi. Towards damages, harassment and mental agony, the claim was for Rs. 1,00,000/-.

vii. Rs. 75,000/- as cost of arbitration proceeding.

viii. Claim for vacant physical possession of the aforesaid allotment to the allottees.

4. Since Wing Commander L.S.Pannu, husband of Smt. Amarjeet Pannu died on 17.09.1984, statement of claim was filed only by Smt. Amarjeet Pannu through her power of attorney Lt. Col. Charanjeet Singh, who was given a general power of attorney executed by respondent Smt. Amarjeet pannu on 05.06.1996 registered before Sub-Registrar, Chandigarh.

5. The Arbitrator vide letter dated 25.04.1997 demanded following documents from claimant-respondent:-

(a) Power of Attorney dated 5.6.1996 is as Smt. Amarjeet Toor W/o Lt. Col. C.S.Toor this needs following clarifications:-

(i) Marriage Certificate with L.C. Toor (With Smt. Amarjeet Pannu) and Lt. Col. C.S.Toor.

(iii) Permission letter from Army for IInd marriage of Lt. Col. C.S.Toor.

(iv) State whether there is any will from late W.C. LS Pannu in favour of Smt. Amarjeet Pannu or any other member of her family.

(v) Details of children of late W.C. L.S. Pannu with age of each children at this stage.

(vi) Whether any succession certificate taken from court or not?"

6. The claim was contested by appellant by filing statement of defence dated 09.05.1997. Arbitrator fixed 12.05.1997 for evidence and documents. Appellant, however, filed an application seeking adjournment. The time for giving award was also agreed to be extended till 30.05.1997 by both the parties.

7. The appellant filed an additional statement of defence, raising issues that there was no arbitration agreement between allottees and the appellant Smt. Amarjeet pannu is not legal representative of estate of Wg. Commander L.S. Pannu; documents relating to death of Sri L.S. Pannu and marriage of Smt. Amarjeet pannu with Lt. Colonel Charanjeet Singh were not placed on record and photocopy of will dated 03.04.1974 was an unregistered instrument. It was also pleaded that Arbitrator had no jurisdiction in the matter.

8. The appellant moved an application under Section 11 of Act, 1940 before Civil Judge, requesting for removal of Arbitrator. 27.05.1997 was fixed on the said application and notice was issued to Arbitrator. The appellant also moved an application before Arbitrator on 19.05.1997, in the evening, that it had already filed an application under Section 11 of Act, 1940, before Civil Judge, for removal of Arbitrator and requested for deferment of proceedings till application is decided by Civil Judge. The Arbitrator made an endorsement thereon that arguments of claimants were already closed and award publishing proceedings were already completed. Another application was filed on behalf of appellant before Arbitrator, seeking adjournment of proceedings to submit argument on behalf of appellant, whereupon, Arbitrator put up the matter on 20.05.1997.

9. On 20.5.1997 again a request for adjournment was made by counsel for the appellant to which Arbitrator, it appears, did not agree and made its award dated 21.05.1997. It allowed the claim as under:-

i. Refund of Rs. 52,000/- alongwith interest @ 18% per annum which comes to Rs. 6,73,226/- up to 20.05.1997.

ii. Refund of Rs. 1,38,000/- alongwith interest @ 18% per annum which comes to Rs. 21,66,354/- up to 20.05.1997.

iii. Expenses for seeking Arbitrator's appointment as Rs. 10,000/-

iv. Expenses of Rs. 59,500/- towards counsel fees and miscellaneous expenses etc. during arbitration proceedings.

10. With respect to the claim towards vacant physical possession of allotted units, Arbitrator said as under:-

" (a) A sum of Rs. 2,82,400/- only being the balance amount as per less sizes of Units taken on 16.5.97. Wherein incorrect measurements were entered by Shri S.K.Sharma, Asstt. Engineer on the attendance sheet for site inspection S.No. 33 and are same as mentioned in pleading in defence on serial page no.4 and 5. Corrected/actual measurements of units taken at site and noted on chit attached the attending sheet here. Serial page 33 taken by the Rep. Of O.P. There is a difference in cost according to the sizes of units mentioned in Broucher and at site are as under:-

As per Broucher

Basement 30 x 15 = 450 Sft.

IIIrd Floor 30 x15 = 450 Sft.

Actual Measurements of Unit at site

Basement 26'-6" x 14'-10 = 394 Sft. only.

IIIrd Floor 26' x14'-7" = 380 Sft. only.

Thus the difference in cost as a proportion rates comes to Rs. 2,69,672/- in lieu of Rs. 3,08,000/- for Basement Units and Rs. 2,07,666/- for IIIrd Floor Units of Rs. 2,40,000/- Total cost comes to Rs. 4,72,338/- in place of Rs. 5,48,000/- for all the 8 units, amount already paid Rs. 1,90,000/- (Rs. 1,38,000/- plus Rs. 52,000/-) therefore balance payment is due Rs. 2,82,338/- to O.P. Respondent (ADA) provided all other formalities such provision as agreed, extensive and modern facilities etc. Where at site nothing is available rather unsound quality of constructions as stated in reply by claimant for pleading in defence dated 17/18-5.97 para 6 on page 3 for which O.P. has advised to satisfy with constructions to claimant.

(b) Shri S.K.Sinha, Asstt. Engineer of O.P. on 16.05.1997 taken incorrect measurements (in attendent sheets) page 33.

(c) Claimant Smt. Amarjeet Pannu shall further pay sum of Rs. 6,29,752/- towards interest @ 18% simple interest w.e.f. 1.1.85 to 20.5.1997 to O.P. i.e. ADA Jaipur House, Agra provided the O.P. shall handed over all the 8 Units in dispute within 120 days from the date of this Award subject to fulfilment of all formalities mentioned in para 1 above, failing which only principal balance amount of Rs. 2,82,400/- of the cost of all the 8 units is payable.

(d) The total amount to O.P. Under para (a) and para (c) Rs. 9,12,152/- shall be adjusted from the claims amounts awarded to the claimant, Smt. Amarjeet pannu.

(e) That the A.D.A. (Agra Vikas Pradhikaran, Agra) not submitted any claim before the arbitrator.

(f) Claimant Smt. Amarjeet Pannu shall be entitled for interest @ 18% p.a. on balance amount after adjustment of O.P's claim amount awarded under para 7(a) and 7 (c) from the date of this Award till the date of actual payment or decree whichever is earlier. "

11. The claimant-respondents filed award in Civil Court for making it Rule of the Court, while appellant filed petition under Section 30 of the Act, 1940 for setting aside the award dated 21.05.1997. The petition filed by appellant for setting aside award has been rejected by court below and it has made the award Rule of the Court vide Judgement and order dated 27.01.2006.

12. Sri Sanjay Kumar Om, learned counsel appearing for the appellant advanced following submissions:-

I. The Arbitrator committed misconduct in proceeding with the award in a biased manner and did not give adequate opportunity to the appellant.

II. The Arbitrator hurriedly proceeded and made award dated 21.05.1997, ignoring the facts that application under Section 11 of Act, 1940 was already filed by appellant on 19.5.1997 in Civil Court, requesting for removal of Arbitrator whereon 27.05.1997 was fixed.

III. The Arbitrator has not applied mind and impugned award is non-speaking and unreasoned.

13. He has placed reliance on a decision of Apex Court in Union of India Vs. Jain Associates and another, 1994 (4) SCC 665.

14. Per contra learned counsel appearing for respondent-claimant contented that appellant acted in a most negligent manner inasmuch as despite having deposited 25% of total cost of 8 units by respondent, A.D.A. made no efforts for giving possession of allotted property. Remaining cost was payable only when A.D.A. Would propose to handover possession and before 15 days of such possession remaining 25% was payable. Nothing on record was shown that A.D.A. made any attempt to handover possession of property in dispute and made demand of second installment of 25%, hence there was no default on its part, yet A.D.A. claimed in a clandestine manner that allotment has been cancelled. Moreover when matter was referred for arbitration, all efforts were made on the part of appellant to obstruct arbitration proceedings. When Arbitrator was not inclined to prolong proceedings, attempt was made by appellant to have Arbitrator changed. Entire submission that Arbitrator has committed misconduct or not proceeded fairly or has failed to apply its mind are false and incorrect. It is said that no interference would be justified since all aspects have been looked into by court below and thereafter it has rejected objection filed by appellant and made the award Rule of the Court.

15. We have heard Sri Sanjay Kumar Om, learned counsel for appellant and Sri Kunal Ravi Singh, learned counsel for respondent and also perused the record.

16. One of the arguments advanced by Sri Sanjay Kumar Om, learned counsel appearing for appellant is that Arbitrator himself demanded certain documents from respondent vide letter dated 25.04.1997. Those documents were not as such made available to Arbitrator either by respondent or appellant and yet Arbitrator proceeded to make award. We have given our anxious consideration to the same. It is not in dispute that Smt. Amarjeet Pannu and L.S.Pannu were husband and wife. They jointly applied for allotment of certain units in commercial complex of appellant and same was allotted on 04.01.1981. They also made payment of 25% of the cost of units i.e. Rs. 78,000/- in respect of 4 units at the basement whereas the total tentative cost was Rs. 3,08,000/-. In respect of 4 units on third floor, total tentative cost was Rs. 2,40,600/-, out of which 25% i.e. Rs. 60,000/- was deposited by the aforesaid allottee. By letter dated 04.02.1981, appellant required allottees to deposit Rs. 28,000/-for basement units and Rs. 24,000/- for third floor units. The said amount was also deposited by allottees on 23.11.1981. This statement of demand of Rs. 28,000/- and Rs. 24,000/- respectively, vide letter dated 04.02.1981, and deposit made by allottees on 23.11.1981, made in para 12 of claim, has been admitted in para 11 of statement of defence submitted by appellant. Grievance of respondent is that construction was not completed within stipulated time and no intimation was given for possession. This has been denied in para 12 of statement of defence by appellant without stating as to when construction was or would be completed. In the entire statement of defence, we do not find any statement, when after completing construction, any letter offering possession was issued to respondent with further request to pay 25% next installment of before 15 days of the date of giving possession.

17. The stand taken by appellant is that initial tentative cost was subsequently increased and therefor notice was given to respondent on 07.03.1986 for payment of balance amount of enhanced cost which the respondent did not pay. In this regard, we find that cost of construction of units, as it was earlier calculated, based on measurement stated in brochure. The Arbitrator, as a matter of fact, found that cost was calculated taking area of units as 450 Sq.Ft., as per brochure, but on actual measurement it was found 394 Sq.Ft on the basement and 380 Sq. Ft. on third floor. Actual area of unis having decreased, cost must have decreased but this was not taken into account by appellant. With regard to fact whether increased cost was worked out on reduced area or on the area mentioned in brochure, no reply at all has been given. Despite our specific query, nothing could be explained to us also.

18. Sri Om, on the contrary said, when information required from respondent was not given, it clearly meant that appellant was not given adequate opportunity in the matter. On the contrary, it is contended that information sought by Arbitrator was supplied to him vide letter dated 25.04.1997. Without looking into the question whether information was given or not, we proceed to examine whether such information has any relevance so far as issues in dispute are concerned. It is not disputed that husband L.S.Pannu died on 17.09.1984 i.e. much before the date when application for appointment of Arbitrator was made in the court below. No other legal heir has claimed estate of L.S.Pannu and in normal rule of succession, estate would stand succeeded by wife. Therefore, Smt. Amarjeet Pannu was a lawful successor of estate of L.S.Pannu on the date when she moved application for appointment of Arbitrator on 01.01.1990 and on the date on which Court appointed Arbitrator and matter proceeded. The respondent, therefore, has right to contest the matter with appellant for enforcing her rights which she succeeded after death of her husband L.S.Pannu. The factum whether she subsequently re-married her attorney, would have no legal consequence to the aforesaid right of respondent Amarjeet Pannu.

19. It is also not in dispute that registered power of attorney was submitted by Lt. Colonel C.S.Toor to participate in arbitration proceedings on behalf of respondent who had subsequently married the aforesaid attorney also. The appellant had no locus-standi to find out whether second marriage of respondent Amarjeet Pannu with Lt.Colonel C.S.Toor was made with permission of Army or not or whether there was any succession certificate obtained from the Court or not. So far as appellant is concerned, all these informations were wholly irrelevant vis-a-vis the issues raised by respondent for enforcing her claims and rights against appellant in respect to allotted units. Therefore, submissions based on Arbitrator's letter dated 25.04.1997 advanced by Sri Om on behalf of appellant are thoroughly misconceived and would have no reflection or consequence on the legality of award as also the impugned order of Court below, making the award as Rule of the Court.

20. Now comes the second question, whether Arbitrator committed misconduct in proceeding to make award, instead of waiting for result on the application moved by appellant before Civil Court for change of Arbitrator. It is not disputed that the Court had not stayed arbitration proceedings at all. It is also not in dispute, when application for change of Arbitrator was made, the claimant had already concluded its arguments and the appellant was avoiding or seeking deferment before Arbitrator, in this regard. In absence of any obstruction or otherwise order passed by any Court of law, Arbitrator was not obliged not to proceed further with arbitration proceedings. It also cannot be held guilty of flouting any legal or otherwise obligations by making the award. The Civil Court allowed application under Section 20 of Act, 1940 on 26.08.1992. Sri S.C.Mangla, Arbitrator was appointed with the consent of parties, vide order dated 16.04.1993. The respondent claimed that she got order of Court only on 06.02.1997. The Arbitrator proceeded with Reference and sent notices to both the parties on 13.02.1997. The Court had given three months' time to Arbitrator to make award. The respondent claimant submitted her statement of claim on 03.04.1997. No claim or counter claim was submitted by appellant before Arbitrator. The first date of arbitration proceedings is 04.04.1997, when appellant appeared and sought adjournment. The Arbitrator allowed time to appellant to file its claim, if any, by 20.04.1997 and also objection to claim of respondent by 24.04.1997. He further fixed 26.04.1997 for hearing on Reference. Nothing was filed by appellant either by 20.04.1997 or 24.04.1997 and, instead, on 26.04.1997, appellant sought time. The Arbitrator allowed time to appellant up to 29.04.1997. It was also made clear that in case no objection is filed, the matter may proceed ex parte. Again on 29.04.1997, learned counsel appearing on behalf of appellant before Arbitrator sought adjournment which was allowed and 03.05.1997 was fixed. On 03.05.1997, none appeared on behalf of appellant before Arbitrator and a letter was sent through some unknown person at the address of Arbitrator seeking further time, which was rejected by Arbitrator and it fixed 12.05.1997 for hearing. It is this date, i.e. 12.05.1997 on which, for the first time, appellant filed its statement of defence but did not file any claim or counter claim. The Arbitrator, in the interest of justice, admitted statement of defence and fixed 18.05.1997 for inspection and arguments with the consent of both the sides. Since three months' time for giving award was going to expire, both the parties agreed to extend time for delivery of award up to 30.05.1997. The appellant again sought adjournment on 18.05.1997, which was rejected, but still next date i.e. 19.05.1997 was fixed for hearing. It is on that date, the appellant filed an application before Civil Court, requesting for change of Arbitrator and simultaneously moved an application before Arbitrator for deferring the matter since application for change of Arbitrator was filed before the Court below. By that time, Arbitrator had already concluded arguments of claimant-respondent. The appellant did not seek any opportunity of hearing before Arbitrator. These facts are self speaking to show that appellant instead of being serious to participate in arbitration proceedings, virtually tried to have the matter continuously deferred for one or the other reason. This also reflects upon the functioning of a statutory body like A.D.A. in the matter, particularly in arbitration proceedings, which is noting but an adjudication forum determined between parties with an objective to have a dispute resolved expeditiously. No claim at any point of time, was submitted by appellant for the reason best known to it, before Arbitrator. In all these circumstances, we find it difficult to accept submission of counsel for the appellant that the Arbitrator has committed any misconduct in proceeding ahead to make the award.

21. Counsel for the appellant has relied upon a decision in Union of India Vs. Jain Associates and another (supra) but we find nothing therein which may help them. In the aforesaid matter, a counter claim was filed on behalf of Union of India which was not considered by Umpire though the court found that there was ample power for consideration. Various issues raised by Union of India were not dealt with by Arbitrator at all. The Court found that award is opposed to all rational and reasonable principles resulting in excessive award or unjust result or the like circumstances which tend to show non application of mind to the material facts placed before arbitrator or Umpire.

22. In the present case, from the statement of defence placed before Arbitrator, we do not find that any such stand was/has been taken by appellant even before court below or before this Court. We do not find that any such condition has been shown to exist by appellant, that award has been given against all rational and reasonable principles and has resulted in excessive award. In fact appellant did not participate in arbitration proceeding in a reasonable manner. Its only attempt was to repeatedly seek adjournments and have the matter deferred. Civil Court had already fixed time for completion of arbitration proceeding. Repeated opportunity was given by Arbitrator to appellant but it failed to substantiate its claim or to object effectively the claim of respondent. In these circumstances, Arbitrator proceeded to make award. It has simply allowed claim considering the fact that money of respondent has remained with appellant for almost one and half decade and, therefore, appellant was liable to pay interest at appropriate rate thereon. It has also considered that the appellant did not observe obligations of its own in offering possession of allotted property to respondent allottee, hence subsequent alleged cancellation on the part of appellant was wholly unauthorized and illegal, depriving the respondent of her right flowing from initial allotment and deposit of 25% by allottee. Despite repeated query, nothing has been brought before us to show that requisite constructions were made by appellant in time and thereafter any letter offering possession was issued to respondent prescribing time to deposit second installment of 25% before 15 days of possession. Further demand raised by appellant in 1986-87 also does not disclose the factum that cost was calculated on actual size of allotted units or it was on the basis of size mentioned in the brochure. The Arbitrator, as a matter of fact, has found difference in sizes of units which were much less than what was mentioned in the brochure but the appellant completely ignored this fact. Before us, it is not disputed that actual size of units was much less than what was mentioned in the brochure and that would have resulted in substantial reduction in the cost of units allotted to allottees. It is also not shown to us that the alleged final increase of costs if would have been calculated on actual measurement of units at site, even that was higher than the cost mentioned in the brochure where-against respondent-allottee had already deposited 25%. Without applying their mind to all these facts, it is evident that appellant acted in a very negligent, careless and arbitrary manner in proceeding to cancel allotment. This act on their part clearly lacks bonafide and nothing has been brought before us to show that appellant had acted in reasonable manner. It is a sorry state of affairs, prevailing in the statutory body like A.D.A., which is expected to function reasonably in accordance with law, with an objective to aid and assist to beneficiaries, for whose benefit it is making constructions and allotment, instead of finding out ways and methods to harass and victimize them. We express strongest disapproval of such conduct of the officers of appellant and condemn them.

23. Considering the entire facts and circumstances, we find it difficult to hold that the impugned award is not speaking or there is any misconduct on the part of the Arbitrator. The Court below therefore, has not erred in law or otherwise in rejecting objection of appellant and making the award, Rule of the Court.

24. The appeal has no merit.

25. Dismissed with costs.

Order Date :- 13.10.2015

Lbm/-