e. Any money claims or any declarations sought will remain within the
jurisdictional limits of the Calcutta High Court. The Respondent had a
jurisdiction.
91. In deciding the issues, the Learned Tribunal relied upon the following
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92. The Petitioner further contended that the judgment relied upon by the
pertains only to defects in title which have no application to the present
case. According to the Petitioner, this judgment does not suggest
93. Furthermore, there is no reference within the judgment to any
particular manner. In fact, another judgment of Madras High Court
by the Arbitral Tribunal. This case not only distinguishes the 1921 full
1963. This is cited in Harsha Estates v. Dr. P. Kalyana Chakravarthy
ii). Arun Prakas Boral v Tulsi Charan Bose 24 held as under:
94. The Petitioner next contends that the judgment in question deals with the
title is restricted merely to raising questions about the title, and does not
involve any question of interpretation of a document. It is further
95. It was further contended that if the Petitioner did not have title, it would
amount of Rs. 14 crores and even at an enhanced rate of Rs. 27 crores in
terms of prayer a(iii) of the counter claim. In fact, there is no prayer in the
counterclaim for adjudication of the Petitioner's title. The meaning
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96. It was also argued that the Arbitrator, being bound by the Undertaking
damages. By decreeing specific performance instead, the Arbitrator acted
in excess of jurisdiction. The Arbitrator, having no legislative powers,
jurisdiction to adjudicate a claim relating to a property situated outside
the jurisdiction of the Calcutta High Court. In doing so, and by publishing
with breach of undertaking. The said judgment held that not only must
act done in breach of the undertaking should be declared void. Based on
this reasoning, the Petitioner submitted that the entire Award is liable to
be declared void. The relevant paragraphs are at paragraph 117, relevant
".....declare such transactions to be void in order to maintain
the majesty of law."
98. Learned Senior Counsel further submitted that the Respondent, during
argument on 12.02.2025, reiterated its claim for both title and possession.
such claim to title and possession. By continuing to advance these claims,
the Respondent is effectively blowing hot and cold at the same time, which
undermines the consistency and credibility of its position. In similar
Limited Vs. Golden Chariot Airport and Anr. WITH Airports
Authority of India Vs. Golden Chariot Airport and Anr. 28, the Hon'ble
and 50 referring to a Judgment by J. Ashutosh Mookerjee:
"It is an elementary rule that a party litigant cannot be
permitted to assume inconsistent positions in Court, to play
fast and loose, to blow hot and cold to a approbate and
reprobate."
99. The Respondent, during argument, stated that there was no question of
territorial jurisdiction, contending that the rights being sought were not
rights in rem. The Undertaking was given precisely for the purpose of
Sections 9 and 11 was renewed after the undertaking was given.
are indeed "rights in Rem." The authority for this is the decision of a five-
Judge Bench of the Calcutta High Court. Moulvi Ali Hossain Mian v.
"All interests in property - whether full ownership or an
interest carved out or full ownership are "rights in Rem.
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101. It was further contended that the Calcutta High Court lacked jurisdiction
dispute. The Arbitrator, despite being aware of the law and the
fundamental policy of Indian law, and Section 34(2A) for patent illegality.
102. This Court, having carefully gone through the Award, found that the
103. The Learned Arbitrator considered the question as to whether the
preposterous. Unlike the decision in the case of SBPL Infrastructure
Limited & Anr. Vs. State of West Bengal & Ors. 30, which did not
the balance ₹14 crores to the Petitioner to be as guarantor. The terms
were clear, explicit, and supported by the initial payment of ₹1 crore as
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does not determine the parties' true intention and purpose. The case of
Punjab National Bank v. Sanchaita Investments & Ors. 31, cited by
the Petitioner, was considered but found distinguishable. The Arbitrator
interpretation falls squarely within his domain. Headings or labels
resolved in accordance with the substantive provisions of the agreement.
cancellation of the Nomination Agreement with ancillary reliefs.
106. The Tribunal's finding was a plausible one, reached within its
Section 34. Interference is therefore unwarranted. While the Petitioner
and delivered his final finding accordingly. Relevant extract whereof is
107. For the purpose of arriving at the aforementioned findings, the Learned
(i) Firstly, the real intention of the Nomination Agreement was to convey
right, title and interest in the Hyderabad property pursuant to a
decree against Express Group. Since the Respondent did not question
the Petitioner's title, it accepted the risk of proceeding on that basis,
and thus no adjudication of title was necessary. Accordingly, the
matter would not fall within the meaning of a "suit for land," and the
relief in the counterclaim was confined to execution of a deed of
conveyance. Because the Section 9 petition for interim relief was filed
in the Original Side of the Calcutta High Court while the property was
located in Hyderabad, the Respondent had furnished an Undertaking
before the Division Bench to maintain its interim relief application,
which was accepted by the Court.
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(ii) It was also held that at no stage did the Respondent abandon its claim
for specific performance of the Nomination Agreement, either before
the Court or the Tribunal. The Undertaking only reflected that the
Respondent would not pursue claims of title and possession in the
arbitral reference, while reserving the right to make such claims after
conclusion of the proceedings. Thus, there was no abandonment as
alleged by the Petitioner.
(iii) On the effect of granting specific performance where the Respondent
had given up claims to possession and title, the Arbitrator relied on
Sections 13 and 17 of the Specific Relief Act. He held that specific
performance cannot be refused merely because the vendor claims to
have no title or a defective one.
(iv) Finally, as the Respondent was satisfied with the Petitioner's title, the
Arbitrator was not required to adjudicate title. The award was confined
to specific performance of the Respondent's accrued right to obtain
conveyance from the Petitioner. During the pendency of the
arbitration, the Express Group had already conveyed the property to
the Petitioner pursuant to a compromise decree and executing court
order, making the Petitioner's title undisputed.
108. In support of the argument, Learned Counsel has relied on the decisions
of Rohit Kochhar vs. Vipul Infrastructure Developers Limited 32 and
2024 SCC Online SC 3584
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Super Smelt Industries Private Limited vs. Singular Infrastructure
Private Limited & Ors. dated 30th November, 2022 in C.S. No. 270 of
2022 with IA No. GA 1 of 2022.
109. The judgments cited are distinguishable, as the Respondent only seeks
enforcement of its right to obtain conveyance of the Hyderabad property
under the Nomination Agreement, which does not violate the
Undertaking given before the Hon'ble Court. The Respondent has not
disputed the Petitioner's title. The arbitral determination is confined to
the enforcement of this right under the Agreement. If the reference was
not about the Nomination Agreement, the Petitioner would not have itself
sought cancellation of that Agreement with consequential reliefs, fully
aware of the consequences of its refusal to perform.
110. Furthermore, the Petitioner has already secured directions from the
Hon'ble High Court for execution and registration of the Deed of
Conveyance dated 13th July, 2010, as reflected in the document itself. In
terms of order passed by this Hon'ble High Court in respect of the said
property, Deed of conveyance executed in favour of the petitioner by
Express publication and Indian Express (Bombay) Limited as confirming
Party.
111. The order of the Hon'ble High Court of Calcutta directing registration of
conveyance deed within 7 days with the Registrar of Assurances,
Hyderabad. It is relevant to note that Petitioner has also obtained the
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registered conveyance in respect of the Hyderabad property by reason of
an order of the Hon'ble High at Calcutta. Therefore, the award, if it is
upheld, can be executed by reason of orders of this Hon'ble High Court.
112. Registration of the conveyance Deed made in Hyderabad. The initial
stamp duty and registration charges of Rs.3,08,00,071/- were paid by
the respondent through its own bank account. It is not denied by the
Petitioner.
113. payment receipt of balance stamp duty assessed at Rs. 3,07,99,649/- in
the collection of Stamp duty Account, Registration & Stamps
department, paid by the respondent.
114. Payment of Stamp duty by the respondent in respect of the same
property for which there is a subsisting Nomination Agreement would
clearly show that the respondent was ready and willing to obtain
conveyance of the property after the conveyance was made in favour of
the petitioner otherwise there was no reason for the respondent to
volunteer to pay stamp duty and registration charges. The petitioner has
also accepted such stamp duty and registration fee from the respondent
without any objection or demur. There is no explanation as to why they
received the stamp duty and registration fee from the respondent.
115. Statement of claim filed by the petitioner invoking the arbitration clause
being clause 12 of the Nomination Agreement. The bad intention of the
petitioner reflects not to convey the property in favour of the respondent,
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when it is only after the petitioner had obtained the conveyance of the
Hyderabad property in its favour that it finally decided not to go ahead
with the Nomination Agreement for conveyance of the property to the
respondent and which led to disputes between the parties in terms of the
arbitration agreement in the Nomination Agreement.
116. Tribunal was quite conscious that if the Respondent had not approached
the Original Side of the Hon'ble High Court at Calcutta with an
application under Section 9 of the Arbitration and Conciliation Act, 1996
in order to get an interim order, there would not have been any
impediment in the way of the respondent to press all the reliefs claimed
in the counterclaim. But only to get the benefit of the interim order from
the Hon'ble High Court at Calcutta, the Respondent offered to give the
undertaking, and the Division Bench maintained the interim order on
being satisfied with the form of undertaking given by the Respondent.
117. It is clear from the undertaking that the Respondent has never
undertaken to abandon the prayer of Specific Performance of the
agreement, but has only undertaken not to proceed with its claim for
possession and title of the said property in the arbitral reference.
Reserving its right to make such a claim for possession and title after
conclusion of the reference. Accordingly, the Respondent specifically
abandoned the prayer for title and possession in the arbitral proceedings
but reserved its right to claim the same later.
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118. The Petitioner argued that a decree of specific performance necessarily
involves transfer of title from Petitioner to Respondent, which would
indirectly amount to a violation of the undertaking given to the Division
Bench.
119. The Arbitrator, however, addressed this issue by referring to Sections 13
and 17 of the Specific Relief Act, 1963. These provisions clarify that:
i) If a person executes an agreement to transfer title in immovable
property, the vendor cannot later claim absence or defect in his own
title as a defence in a suit for specific performance filed by the
purchaser.
ii) In contrast, the purchaser can resist specific performance by
contending that the vendor had no title or defective title in a suit filed
by the vendor.
120. On this reasoning, the Arbitrator rejected the Petitioner's objection that a
decree of specific performance would breach the undertaking, holding
that the Respondent had confined its claim strictly in line with its
undertaking and reserved rights.
121. It is very clear and explicit that in a suit for specific performance of
contract filed by the respondent, he may be satisfied with title of the
vendor/petitioner and in that situation, the Court dealing with such suit
will not go into the question of adjudication of the title of the
vendor/petitioner.
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122. On the other hand, the respondent, at his own risk, can pray for
adjudication of the title of the petitioner in the suit property after
adjudication of the proceeding. Now by virtue of the undertaking given by
the Respondent, in this proceeding, he has abandoned such right in this
arbitral proceeding and consequently, it would not be entitled to pray for
adjudication of such title or possession in this proceeding.
123. Therefore, there is no bar to pray a decree for specific performance in a
suit filed by the respondent/purchaser without adjudicating the question
of title and possession of the vendor in the property when the plaintiff
does not insist on adjudication of such question.
124. Similarly, if the Respondent/Purchaser decides not to pray for title and
possession in this proceeding reserving it's right to make such claim for
possession and title after conclusion of the reference, it is for the
Respondent to do the same, if law permits and therefore, the Tribunal
rightly not gone into that question in the proceeding. Therefore, in a suit
for specific performance of contract filed by a respondent can raise the
question of title of the purchaser in the property in question at its risk
and in view of the undertaking given by the respondent/purchaser, it is
precluded from raising such question of title and possession in the
proceeding after reserving its right make such claim for possession and
title after the conclusion of the arbitration proceeding, if law so permits.
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125. The Tribunal rejected decisions relied upon by the Petitioner that were
precedents based on "SUIT FOR LAND", holding that those decisions
were irrelevant since the Division Bench had accepted the Respondent's
undertaking without requiring abandonment of specific performance.
The Tribunal, therefore, dealt with the prayer for specific performance of
the contract without considering the claim for possession and title of the
said premises in the arbitral reference.
126. As pointed out earlier, title here means the title of the
Claimant/petitioner in the property. Even for the sake of argument, if the
petitioner has acquired no title over the property by virtue of its decree
against Express Group, in this Counterclaim, the Respondent would not
raise such question in terms of its undertaking.
127. Thus, the undertaking given by the Respondent does not oust the
jurisdiction of this Tribunal to award specific performance if the
Respondent proves the other requirements of getting a decree for specific
performance of contract in accordance with law without deciding the
issue of title of the Claimant in the property covered by the sale-decree
against the Express Group and without granting any order of possession.
128. It appears that the Respondent has prayed for specific performance of
the Nomination Agreement in the following manner:
a) An award for specific performance of the Nomination
Agreement dated 5th December, 2005 and/or the object
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thereof, that is to cause the subject property to be
transferred to the respondent, in the following manner:
"Transfer of the subject property by the claimant
to the respondent by execution of a Conveyance
Deed against payment of the consideration
amount as specified in the Nomination
Agreement."
129. The Tribunal found the Respondent had performed its obligations, while
the Claimant obstructed performance by falsely alleging notice under
Clause 9 and by taking the Express Group deed in its own name to
frustrate the agreement.
130. Relying on Durga Prasad v. Deep Chand33, the Tribunal directed the
petitioner to re-convey rights obtained under the sale decree to the
Respondent against balance payment, without granting possession or
ruling on title, leaving the Respondent bound by its undertaking before
the Division Bench. The plea that the Nomination Agreement became
infructuous was rejected, with reliance on Namburi Basava
Subrahmanyam v. Alapati Hymavathi34 that substance, not
nomenclature, governs interpretation.
131. Therefore, without deciding the question as to whether the Petitioner
acquired title over the property by virtue of the decree for sale against
AIR 1954 SC 75
(1996) 9 SCC 388
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Express Group, bound to grant a decree for Specific Performance of the
Nomination Agreement admittedly executed by the parties.
132. Therefore, it has been rightly held by the Arbitrator that there is no bar
in granting a decree for specific performance in a suit filed by the
purchaser/respondent without adjudication of title. The observations
and findings of the Learned Arbitrator are plausible and possible views
which would not require interference of the Hon'ble Court, in the present
proceedings filed under Section 34 of the Act.
133. The judgments relied upon by the respondent in the case of National
Highways Authority of India (supra), Punjab State Civil Supplies
Corporation Limited (supra) and similarly, in the case of UHL Power
Company Limited (supra), are squarely applicable in the present facts
and circumstances of the present case is concerned that if the
arbitrator's view is plausible and possible, it need not be re-examined,
and the interpretation of contractual terms falls squarely within the
domain of the arbitral tribunal and where two views are possible and the
arbitrator has adopted one, the award cannot be set aside, and
interference is permissible only if the award is against the public policy
of India or conflicts with basic notions of morality and justice, making
court intervention virtually prohibited beyond the Act's framework, the
court does not act as an appellate forum and may only ascertain whether
the arbitrator's interpretation is plausible and possible.
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134. This court also relies a decision passed in the case of Adcon Electronics
pvt. Ltd.v. Daulat and Another35, particularly paragraph Nos. 10 to 12
and 14 to 19 thereof as under:-
"10. The learned Single Judge while dismissing the chamber
summons took the view that so far as the High Court of Bombay
was concerned the law was well settled that suits for specific
performance, even though they might relate to the land, were not
suits for land. On appeal the order of the learned Single Judge
was confirmed by the Division Bench opining that the suit for
specific performance of an agreement for sale was not a "suit for
land".
11. The question then arises as to what is meant by "suit for
land". This expression has been interpreted by different High
Courts as well as by the Federal Court.
12. In His Highness Shrimant Maharaj Yashvantrav Holkar of
Indore v. Dadabhai Cursetji Ashburner [ILR (1890) 14 Bom 354] a
Division Bench of the Bombay High Court held that a suit for
specific performance would not fall within the meaning of that
expression. There the suit was filed for specific performance of an
agreement to mortgage certain immovable property. The
agreement was made in Bombay between the parties on 8-1-
1883. The Divisional Court held, "it had jurisdiction" and granted
decree. On appeal a Division Bench referred to an earlier
judgment of that Court in Yenkoba Balshet
Kasar v. Rambhaji [(1872) 9 Bom HCR 12] which laid down that
suit for land was a suit which asked for delivery of land to the
plaintiff. The High Court also referred to the view of the Calcutta
High Court in Delhi and London Bank v. Wordie [ILR (1876) 1 Cal
249] (ILR at p. 263) construing that expression to mean,
"substantially for land" -- "that is, for the purpose of acquiring
title to, or control over, land". It also noticed the view of a learned
Single Judge of the Calcutta High Court in Sreenath Roy v. Cally
Doss Ghose [ILR (1880) 5 Cal 82] holding that the court had no
jurisdiction to make a decree in a suit for specific performance.
(2001) 7 SCC 698
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The Division Bench of the Bombay High Court held that the suit
was within the jurisdiction whether regarded as a suit for specific
performance or to enforce equitable mortgage by deposit of title
deeds as a court of equity in England could entertain it.
14. In Debendra Nath Chowdhury v. Southern Bank Ltd. [AIR
1960 Cal 626 : 64 CWN 439] a Division Bench of the Calcutta
High Court took the view that the suit for specific performance of
the contract to execute and register a lease with alternative claims
for damages is not a "suit for land" within the meaning of clause
12 of the Letters Patent.
15. From the above discussion it follows that a "suit for land" is a
suit in which the relief claimed relates to title to or delivery of
possession of land or immovable property. Whether a suit is a
"suit for land" or not has to be determined on the averments in the
plaint with reference to the reliefs claimed therein; where the relief
relates to adjudication of title to land or immovable property or
delivery of possession of the land or immovable property, it will be
a "suit for land". We are in respectful agreement with the view
expressed by Mahajan, J. in Moolji Jaitha case [AIR 1950 FC 83 :
1949 FCR 849] .
16. In a suit for specific performance of contract for sale of
immovable property containing a stipulation that on execution of
the sale deed the possession of the immovable property will be
handed over to the purchaser, it is implied that delivery of
possession of the immovable property is part of the decree of
specific performance of contract. But in this connection it is
necessary to refer to Section 22 of the Specific Relief Act, 1963
which runs:
"22. Power to grant relief for possession, partition, refund of
earnest money, etc.--(1) Notwithstanding anything to the contrary
contained in the Code of Civil Procedure, 1908, any person suing
for the specific performance of a contract for the transfer of
immovable property may, in an appropriate case, ask for--
(a) possession, or partition and separate possession, of the
property, in addition to such performance; or
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(b) any other relief to which he may be entitled, including the
refund of any earnest money or deposit paid or made by him, in
case his claim for specific performance is refused.
(2) No relief under clause (a) or clause (b) of sub-section (1) shall
be granted by the court unless it has been specifically claimed:
Provided that where the plaintiff has not claimed any such relief
in the plaint, the court shall, at any stage of the proceeding, allow
him to amend the plaint on such terms as may be just for
including a claim for such relief."
17. It may be seen that sub-section (1) is an enabling provision. A
plaintiff in a suit of specific performance may ask for further
reliefs mentioned in clauses (a) and (b) thereof. Clause (a)
contains reliefs of possession and partition and separate
possession of the property, in addition to specific performance.
The mandate of sub-section (2) of Section 22 is that no relief under
clauses (a) and (b) of sub-section (1) shall be granted by the court
unless it has been specifically claimed. Thus it follows that no
court can grant the relief of possession of land or other immovable
property, subject-matter of the agreement for sale in regard to
which specific performance is claimed, unless the possession of
the immovable property is specifically prayed for.
18. In the instant case the suit is for specific performance of the
agreement for sale of the suit property wherein relief of delivery of
the suit property has not been specifically claimed, as such it
cannot be treated as a "suit for land".
19. We cannot also accept the contention of Mr Chitale that the
suit is for acquisition of title to the land and is a "suit for land". In
its true sense, a suit simpliciter for specific performance of
contract for sale of land is a suit for enforcement of terms of
contract. The title to the land as such is not the subject-matter of
the suit."
135. In the light of above discussion and finding of the arbitrator and upon
relying on the aforesaid judgments, this court is fully convinced with
findings of the Arbitrator since there is no perversity or illegality and
hence, call for no interference under Section 34 of the Act.
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ISSUE NO.5: - VIOLATION OF PRINCIPAL OF NATURAL JUSTICE
136. Insofar as the question of Violation of natural justice by the arbitrator by
citing decisions/judicial precedents while considering the issues framed
in the arbitral proceeding without noticing the parties or behind the back
of the petitioner is serious breach of the public policy of Indian law and
same required to be set aside. It was vehemently argued by the learned
Sr. counsel for the petitioner and further submitted that the learned
Arbitrator has relied numerous judgments to arrive at a conclusion that
the claim of the petitioner fails and counter claim of the respondent
succeeds and finally allowed the counterclaim of the respondent together
with costs as aforesaid.
137. According to him more or less 70 judgments were relied upon by the
Arbitrator without notice to the Petitioner, which amounts to serious
violation of principles of natural justice, and the petitioner is highly
prejudiced as no chance was afforded to revert or distinguish the same.
If the petitioner had been allowed 'Audi alterum partem', the final result
would have been changed. The Award dated 27 th October, 2020 is in
serious breach of the Principles of natural justice and therefore, the
same is liable to set aside.
138. The grievance of the Petitioner is that the Arbitrator went on a wandering
of his own on several issues, or did personal research or investigation,
and made findings based on multiple cases, and definitions and legal
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provisions which neither party had relied upon or referred to the
Tribunal in oral or written arguments. All of them are new points, many
of which were not even argued, and are practically not applicable in the
facts and circumstances of the proceeding pending before the Tribunal.
139. It was argued on behalf of the Petitioner that the Arbitrator is prohibited
from travelling outside of the pleadings or the arguments made by the
parties, and/or even the cases, unless referred by the parties.
140. Even in the High Court and the Hon'ble Supreme Court, when a Judge
wishes to express a view or relies upon a case not cited by the parties at
the hearing then the judge puts the parties on notice of such a binding
precedent or provision of law is relevant to the arguments put forward
and asks the parties to consider the issue and address the court
accordingly.
141. It was further argued that if an Arbitrator bases findings on personal
knowledge or material not placed by the parties--including dictionaries,
laws, or judicial decisions--it amounts to miscarriage of justice. This is
contrary to the fundamental policy of Indian law, which requires that
parties must always have the right to comment on all factual and legal
circumstances relevant to the decision.
142. The Petitioner has placed reliance of Judgments on this issue are cases
mentioned hereunder written:
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Ssangyong Engineering (supra) at paragraph 74:
"....... these guidelines were never, disclosed in the
arbitration proceedings............ the appellant could have
argued, without prejudice to the argument that linking is
dehors the contract.........For this reason the majority award
needs to be set aside under Section 34(2)(a)(iii)"
Delta International Limited & Ors. Vs. Smt. Nupur Mitra &
Ors.36, at paragraphs 39/40/41:
Paragraph 39.
".....decision is made on the basis of a judicial precedent
not referred to in course of the arguments, it would
amount to breach of the most elementary canons of
natural justice."
Paragraph 40:
"Indeed, the miscarriage of justice that may be
occasioned by a judgment referring to judicial
authorities without such precedent being brought to the
notice of the parties or the part likely to be affected
thereby"
Paragraph 41:
"It is, therefore held that it is generally undesirable that
judicial precedents be referred to or made the basis for
any finding in a judgment without the attention of the
2017 SCC OnLine Cal 13094
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parties represented before the court first being drawn to
them."
143. Consequently, the Division Bench of the Calcutta High Court laid down
the law allowing the appeal and setting aside the decision of the Single
Judge.
144. The Respondent has furthermore relied upon a Single Bench decision of
2013 in the case of Birla Education Trust (supra) in a company law
matter, the relevant portion is set out below:
"In the event, however, a new point of law, not argued by
any of the parties, is introduced in a judgment referring to
authorities not cited by any of the parties, that would
constitute violations of the principles of natural justice."
145. Another oral argument was made by the Respondent that the law and
cited case of the court is supposed to be known to everyone, therefore it is
not a breach of natural justice. The arbitration law as enshrined in
Sections 18 and 24 read together with exposition in Ssangyong
Engineering (supra) requires that an Arbitrator is confined to documents
and cases before him. Even if the 70 cited judgements and several
dictionaries are divided into two groups, one which was in relation to the
argued issues and the other on new legal issues, then also almost 40
cases will fall in the category of new cases on new points which were not
even argued by any of the parties. The Petitioner is aggrieved by these new
cases which are on new and different principle of law without notice. The
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Petitioner is also aggrieved by the introduction of several dictionaries and
the taking of judicial notices on multiple issues by the Arbitrator.
146. The Petitioner further relied on the 2017 Division Bench judgment in
Delta International (supra), particularly at paragraph 39, which set
aside the single judge's decision, thereby limiting the proposition relied on
by the Respondent. Additionally, the Petitioner cited the Delhi High
Court's decision in Microsoft Corporation vs. Zoai Founder 37 where an
arbitral award was set aside on similar grounds in a Section 34
application, reinforcing the claim that the Award here is unsustainable. At
paragraph 48 citing a decision of the Madras High Court, M/s Tribol
Engineering Pvt. Ltd., rep. By its Managing Director Mr. K. Venkat,
Bangalore - 560 070 Vs. Indian Oil Corporation Limited, rep. By its
Deputy General Manager (Engineering), Indian Oil Bhavan, Chennai
34 and Anr.38:
"48. It is not the duty of the arbitrator to go to the aid of the
parties and state what they could and should have done
from themselves. His function is to not supply his special
knowledge, but to play the role of an impartial
arbitrator.........
147. The Petitioner argued that the Arbitrator displayed a predisposition
against it, breaching natural justice and the principle of equal treatment,
since each breach ultimately benefited only the Respondent. According to
2023 SCC OnLine Del 3800
(1998) 3 СТС 385 : 1998 SCC OnLine Mad 698
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the Petitioner, the Award lacked judicial fairness, violated the
substantive provisions of the Arbitration and Conciliation Act, 1996, and
must therefore be set aside under Section 34(2)(b)(ii), Explanation 1(ii) &
(iii), and distinctly Section 34(2A) for patent illegality.
148. In reply, the Respondent strongly opposed, maintaining that the
Arbitrator decided the case strictly on the statute, evidence--oral,
documentary, and oral and written arguments--submitted by both
parties. While it is true some judgments and definitions were referred to,
these were only supplementary clarifications and did not prejudice either
party.
149. The Respondent emphasized that the findings were based squarely on
the materials brought before the Tribunal, and even if the impugned
judgments were excluded, the outcome would remain unchanged.
Further, as judgments of the High Court and Supreme Court constitute
binding law in India, an arbitrator may rely on them without notifying
the parties unless such precedents are wholly irrelevant and no manner
of application in the issue decided by the Arbitrator. It should be
demonstrated by the Petitioner while considering the case under Section
34 of the Act,1996.
150. In the course of reply, the Petitioner has relied on the decisions of
Microsoft Corporation (supra), particularly paragraphs 21 to 25, but
this judgment is distinguishable on facts as the Learned Court in that
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case had brought on record material evidence by conducting its research
which is not equivalent to placing judicial precedents and/or settled legal
propositions. The said judgment is factually distinguishable, relying on
paragraph 20 as the Arbitrator proceeded to conduct his own research
on 'material evidence' available on the records and it is permissible in
law if same comes within the four corners of the statute.
151. In support of its submissions, the respondent has relied on a same
judgment of the Hon'ble High Court at Calcutta in Birla Education
Trust (supra), particularly paragraph 21 thereof to support the
proposition that judicial precedents can be relied upon by Court.
152. This court is of the considered view that none of the judgments cited by
the Arbitrator would alter the result of the proceedings, even if excluded.
No illegality, perversity, or prejudice was found in the reliance of such
precedents. The Paragraph no. 21 of the Birla Education Trust (Supra)
is set out herein under:
"21. While testing the validity of the order impugned, I will
also have to examine the issue of reference to decisions in an
order which was not cited by any of the parties to a
litigation. Before me, no case was made out by any of the
parties that these judgments were cited by way of them. In
my opinion, however, if certain established principle of law is
clarified by the Court itself on the basis of judicial authorities
found by the Court by making its own research, that would
not constitute an illegality, provided there was argument
before the Court on such principle. In the event, however, a
new point of law, not argued by any of the parties, is
introduced in a judgment referring to authorities not cited by
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any of the parties, that would constitute violations of the
principles of natural justice. The judgment of the Division
Bench of this Court in the case of Damodar Valley
Corporation (supra), does not hold in absolute term that such
reference in all cases would be illegal and invalidate the
judgment itself. In the judgment impugned, the six decisions
referred to by the CLB deal with the principles for granting
interim order, which was an issue before the Board. As such,
I do not consider such exercise on the part of the CLB to be
erroneous to that degree that the same would invalidate the
order itself."
153. The Petitioner herein has also failed to show before this court as to how
the learned arbitrator or as judicial authority can be estopped from relying
on the precedents of the higher Court in support of his findings, which
have already been arrived thereat. All inferior courts or Tribunal are
bound by the precedents of the Hon'ble Supreme Court and the High
Courts. As much as it would have been preferable for the Arbitrator to
notify the parties, the failure to do so, has caused no injustice or
prejudice; those judgment and research are based on his judgment on
materials placed by the parties before the Tribunal. On that note, this
Court finds the Petitioner's objection is unsustainable and requires no
interference.
ISSUE NO 6 : IGNORANCE OF THE MATERIAL EVIDENCE PLACED
BEFORE THE TRIBUNAL
154. The Petitioner argued that the Arbitrator either ignored or failed to
consider material evidence it had placed on record, and that proper
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consideration of such evidence would have resulted in a different
outcome, favourable to the Petitioner.
155. This court, however, is of the view that the arbitrator has in fact
considered all the relevant material evidence placed by the parties in the
arbitral proceedings in connection with the crux of the subject matter of
disputes as referred, and assessed them correctly before concluding his
findings that the Petitioner's claims were devoid of merit and while
allowing the Respondent's counter claim thereof. Therefore, this court,
under Section 34, does not and cannot say that the Learned Arbitrator
has either ignored and/or not considered the material evidence; rather,
that it is correctly assessed.
156. This court has limited scope to consider/set aside the impugned Award
under Section 34 as already discussed herein above.
157. This Court is of the considered view that the Arbitrator had not ignored
evidence but had thoroughly examined it in detail while deciding the
issues framed therein. The Award, running nearly 300 pages, dealt
comprehensively with matters such as notices issued by the Petitioner for
termination or cancellation of the contract, oral and documentary
evidence with regard to allegations of fraud and bribery, alleged tape-
recorded transcriptions, terms and conditions of the Nomination
Agreement, negotiations between the parties, court proceedings, the
compromise decree as discussed above, and undertaking given by the
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respondent with regard to title and possession etc. Therefore, contention
of the petitioner on this issue of serious violation of principle of natural
justice and non-consideration of material evidence, is unsustainable and,
therefore, contention of the petitioner is liable to be rejected.
ISSUE NO.7:- PURE QUESTIONS OF LAW
158. Two remaining pure questions of law as raised by the petitioner are as
herein under to be considered by this court: -
a. Whether the 2018 amendment to the Specific Relief Act, 1963, was
prospective or retrospective in its application?
b. Whether a proceeding for specific performance of an executory contract,
in which the Petitioner had pleaded termination of the contract, would
be maintainable in the absence of a prayer declaring such termination
to be illegal?
159. On behalf of the Petitioner, it was submitted that the amendment to
Specific Relief Act 1963 contained no indication of retrospective
application, either by express words or necessary implication. The Gazette
notification of 19.09.2018 merely fixed 01.10.2018 as the date on which
the amendment would take effect, and both the text of the amendment
and the parliamentary debates were silent on any retrospective operation.
160. The Petitioner further contended that the Tribunal's conclusion stood
vitiated because it relied on five Supreme Court decisions of its own
accord, introducing new points of law without giving notice to the
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Petitioner. This denial of opportunity to respond amounted to a violation
of natural justice. These decisions formed the basis of the tribunal's
conclusion, which are noticed in the following words:
"Applying the above principles laid by the Supreme Court in
the facts of the present case this Tribunal holds that the
amended provisions of the Specific Relief Act, which are all
procedural in nature will be applicable to the present
proceedings".
161. It was further submitted that the Tribunal wrongly decided that the
Specific Relief Act is procedural law, which was not argued by either of the
parties. This is not a finding in view of the judgment of the Hon'ble
Supreme Court in the case of Hungerford Investment Trust Ltd. (In
Voluntary Liquidation) Vs. Haridas Mundhra & Ors. 39 cited by the
Tribunal. The case of Anant Gopal Sheorey Vs. State of Bombay40, on
which the Tribunal relies for its finding, is a purely criminal matter
relating to Criminal Procedure and has nothing to do with the Specific
Relief Act. The case of Garikapati Veeraya v. N. Subbiah Choudhury41
does not relate to Specific Relief law and says nothing different from the
very recent decision of the Supreme Court in the case of Rajesh Mitra
alias Rajesh Kumar Mitra and Anr. Vs. Karnani Properties Ltd. 42,
which does not lead to the conclusion that the Specific Relief Act
AIR 1972 SC 1826 : (1972) 3 SCC 684
AIR 1958 SC 915
AIR 1957 SC 540
2024 SCC OnLine SC 2607
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amendment is retrospective. The Tribunal wrongly applied that the litigant
has no vested right in procedural law, citing and relying upon paragraph
26(iii) of the case H.V. Thakur v State of Maharashtra43, when the
correct and applicable paragraphs are 26(iv) and 26(v) of the same
judgment, which are set out below.
"(iv) A procedural statute should not generally speaking be
applied retrospectively where the result would be to create
new disabilities or obligations or impose new duties in
respect of transactions already accomplished.
(v) A statute which not only changes the procedure but also
creates new rights and liabilities shall be construed to be
prospective in operation, unless otherwise provided, either
expressly or by necessary implication."
162. It was further vociferously argued that the law set out is crystal & clear in
the paragraphs set out above. The amendment created new obligation and
duties upon the Petitioner, while simultaneously conferring new rights
upon the Respondent. Hence, the unamended continued to apply. The
Tribunal's finding that the amendment applied retrospectively, based on
certain decisions, was erroneous and constituted a direct breach of
Sections 18 and 24 of the Arbitration and Conciliation Act, 1996, since it
deprived the Petitioner of an opportunity to present its case and thereby
violated natural justice.
(1994) 4 SCC 602
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163. In support, the Petitioner relied on Mehboob Ur Rehman v Ahsanul
Ghani44, which clearly held that the amended Act would not apply to
arbitral proceedings.
164. The Supreme Court itself subsequently relied upon this very precedent in
two later cases: C. Haridasan v. Anitha45, particularly para 64 and
Sangita Sinha v. Bhawana Bhardwaj & Ors. 46, particularly para 18E,
both reaffirming the principle that the Specific Relief (Amendment) Act,
2018 applies prospectively. The Tribunal, in ignoring these binding
precedents, acted contrary to the fundamental policy of Indian law. The
Petitioner contended that the Tribunal also failed to distinguish between
substantive law and substantive rights.
165. A full bench of Calcutta High Court has held that the Specific Relief Act is
an adjective law in the context of the 1877 Act, [Moulvi Ali (supra)]. It is
therefore incorrect to say that entirety of the Specific Relief Act 1963 is
only procedural.
166. The parties when entering into a contract in 2005 had certain rights and
expectation. Any application of amended law by the Arbitrator would
change the existing rights and obligation of the parties as they existed in
2005. This is prohibited and unfair.
(2019) 19 SCC 415
2023 SCC OnLine SC 36
2025 SCC OnLine SC 723
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167. Indeed, the Supreme Court in Katta Sujatha Reddy v. Siddamsetty
Infra Projects Limited and Ors. 47 para 13, held that Section 10 of the
1963 Act is substantive, not procedural. Thus, the Tribunal's contrary
finding, that the entire Act is procedural, was perverse.
168. The Petitioner further argued that when the contract was entered into in
2005, the parties had specific rights and obligations. Application of the
amended law would unfairly alter these settled rights and expectations,
which is impermissible. Reliance was also placed on Saradamani
Kandappan v. S Rajalakshmi and Ors.48 and Satya Jain and Ors. v.
Anis Ahmed Rushdie and Ors.49, where the Hon'ble Supreme Court held
that after long delay, any decree for specific performance must be at the
market price of the property at the date of the decree. Despite the
Petitioner raising this point, the Tribunal failed to address or apply this
settled law.
169. It was further contended that the Respondent's prayer for specific
performance was not maintainable, as it was made without seeking
declaratory relief. This is simply because there cannot be a specific
performance of an Agreement that has been terminated and is therefore
non-existent unless the Agreement is revived by a declaration that the
termination was invalid.
(2023) 1 SCC 355
(2011) 12 SCC 18
(2013) 8 SCC 131
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170. The Supreme Court of India has consistently held that absent of a prayer
for declaratory relief, that termination/cancellation of the agreement is
bad in law; a suit for specific performance is not maintainable. The
Petitioner relied on binding precedents: I.S. Sikander v. K.
Subramani50, particularly paragraph Nos. 37-38 thereof and Mohinder
Kaur v. Sant Paul Singh51, particularly paragraph no. 4 thereof, both of
which affirm that, without setting aside termination, specific relief is
barred. Despite these citations, the Arbitral Tribunal rejected the
authority of I.S. Sikander (supra) and ignored Mohinder Kaur (supra),
instead relying on Ganesh Shet v. Dr. C.S.G.K. Setty52 which the
Petitioner contended was inapplicable.
171. The Tribunal ignored these two binding precedents on the specious plea
that this issue was decided in the case of Ganesh Shet (supra).
172. The finding of the Arbitrator of the Award in the Award is set out herein
below:
"the Supreme Court did not lay down as a proposition of law that
in every case of specific performance of contract where the
defendant has alleged termination of contract, a prayer for
declaration of invalidity of the termination must be sought"
173. It was further held by the Tribunal as hereinbelow:-
"in all suits for Specific Performance of Contract, if the defendant
takes a stance that the agreement in question has been terminated
(2013) 15 SCC 27
(2019) 9 SCC 358
(1998) 5 SCC 381
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by him, the plaintiff must make a prayer for declaration that such
termination is illegal and that in the absence of such prayer, the
suit must be dismissed, such view is inconsistent with the earlier
view taken by another two Judges-bench in the case of Ganesh
Shet v. C.S.G.K. Setty (Dr) (supra) and thus, is not binding as a
valid precedent."
174. According to the Petitioner the ratio of Ganesh Shet (Supra) is not
applicable in the facts of the case. In that case, the dispute concerned
whether specific performance could be granted for an agreement
(Agreement B) not pleaded in the plaint but emerging from the evidence,
when the original pleaded contract (Agreement A) was found non-existent.
The Supreme Court held that relief in a suit for specific performance
cannot be granted for an agreement not specifically pleaded particularly
paragraph Nos.8-20. The question of declaratory relief against termination
never arose in Ganesh Shet. Thus, the Tribunal's reliance on it not only
prejudiced the Petitioner but also muddled the correct legal position.
175. On the contrary, the settled law, reiterated most recently in Sangita
Sinha (supra), particularly at paragraph 18E, is that in all suits for
specific performance where termination is alleged, the claimant must also
seek a declaration that such termination is invalid. This proposition has
been laid down as absolute, regardless of factual variations.
176. In view of the above, it is the contention of the Petitioner that the
Tribunal, by refusing to follow binding precedents, ignoring applicable
authorities, and rendering findings contrary to the settled legal position,
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has acted in violation of the fundamental policy of Indian law. The Award
is therefore vitiated both under Section 34(2)(b) Explanation 1(ii) of the
Arbitration and Conciliation Act, 1996, being in conflict with the public
policy of India, and under Section 34(2A), as it suffers from patent
illegality on the face of the record. Accordingly, the impugned Award is
liable to be set aside.
177. With regard to the first pure question of law, the Peitioner's case is that
the Learned Arbitrator's finding is incorrect on account of the judgment of
Katta Sujatha (Supra). This judgment has been set aside by the Hon'ble
Supreme Court in the judgment of Siddamsetty Infra Projects Private
Limited (supra).
178. Even otherwise, the Learned Arbitrator has held that the Nomination
agreement dated 5th December, 2005 is in effect an agreement to convey
right, title and interest to the Respondent by the Petitioner, which the
petitioner obtained by virtue of the decree against Express Group, on
payment of consideration.
179. The Learned Arbitrator has independently disregarded the case made out
by the Petitioner and held that the judgments referred by the petitioner
have no manner of application to the facts of the present case.
180. The Petitioner argues that the Arbitrator's finding that the 2018
Amendment to the Specific Relief Act applies retrospectively is perverse.
Reliance on Katta Sujata (Supra) is misplaced as it was later set aside in
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review in Siddamsetty Infra Projects (Supra). Under this decision, even
under the unamended Act, if the ingredients for specific performance are
satisfied, courts are bound to grant specific performance for immovable
property due to the mandatory nature of the word "shall" in the
Explanation to Section 10.
181. Thus, under both the unamended and amended Specific Relief Act, an
agreement for transfer of immovable property mandates specific
performance, since breach of such a contract cannot be adequately
compensated by damages. The Arbitrator's conclusion to grant specific
performance would therefore remain unchanged under either regime.
182. The Tribunal further held that while substantive rights of the parties' stem
from the Contract Act, the procedure for enforcement is governed by the
Specific Relief Act, which is not exhaustive in itself. This view aligns with
the Supreme Court's ruling in Hunger ford Investments Trust (supra)
page 1832 and similarly a Full bench Judgment of Calcutta High Court in
the case of Moulavi Ali Hussain Mian (supra).
183. On the second pure question of law, the Petitioner argued that since the
Respondent did not seek a declaration that the termination of the
Nomination Agreement was illegal, null and void, no relief of specific
performance could be granted. In the absence of such declaratory relief, a
prayer for specific performance is not maintainable.
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184. The Learned Arbitrator dealt with this issue in detail in its Award, this
court does not find it necessary to quote such details herein. The Learned
Arbitrator has firstly noticed that there were specific issues which were
framed in the arbitration on the question of whether the Nomination
Agreement was cancelled or terminated by any notice in writing.
185. Referring to paragraphs 9 and 10 of the Nomination Agreement, the
Arbitrator held that the contract prohibited unilateral termination except
upon the happening of specified contingencies where the agreement would
automatically lapse. The essential pre-condition was that the claimant
must serve a 30-day notice for execution of the conveyance deed, and if
the Respondent failed to arrange funds within 90 days, the contract would
terminate automatically. The Respondent contended no such notice was
served, whereas the Petitioner argued CW1 orally conveyed such
intimation immediately after execution of the agreement.
186. The Arbitrator further held that in other words, if in the contract, there is
no clause specifying rescission of a contact unilaterally at the instance of
one or the other of the parties, the same must be done either by the
agreement of the parties or through adjudication either by way of suit for
Specific Performance of Contract filed by one who dispute the termination
or by suit for rescission of contract by the party who allegedly terminated
the contract.
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187. Consequentially, in a suit for specific performance of contract, if the
petitioner herein takes a plea that he has, of his own, terminated the
contract and as such, the contract, the specific performance of which is
sought, is not in existence, the court or tribunal dealing with such
proceeding is required to specifically come to a conclusion, first, as to
whether the contract in question allows the petitioner to unilaterally
terminate the same and if the answer is in affirmative, then the next
question would be whether the contract imposes any condition precedent
which is sin qua non for exercise of such right of termination by the
petitioner.
188. If any such condition is prescribed, the Court or Tribunal will decide
whether such circumstances are existing justifying termination of the
contract by the petitioner. If the Court or Tribunal finds that the Contract
in question does not permit unilateral termination of contract at the
instance of the petitioner, it will answer the issue in favour of the
respondent. Similarly, if it finds that the circumstances in which such
termination is permissible do not exist, in that case, it will reject the
defence of the petitioner and will grant a decree for Specific Performance
provided of course that the respondent proves other conditions necessary
for getting a decree for specific performance.
189. Therefore, when the Court or Tribunal passes a decree for specific
performance of contract, in effect, it declares such right in favour of the
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respondent based on its findings in the proceedings that the defences of
the petitioner were not tenable. There is, therefore, no necessity of
separately praying for declaration that all the defences taken by the
petitioner opposing the prayer for specific performance are illegal or not
tenable.
190. The Arbitrator further noted that the Petitioner itself had sought relief
declaring that the Nomination Agreement stood terminated, and also
prayed for its cancellation. On that basis, the issue of validity of
termination was squarely framed and adjudicated.
191. Having led evidence on the issue, the Petitioner could not later argue that
a separate declaratory prayer was mandatory. The Arbitrator, relying inter
alia on Ganesh Shet (Supra), concluded that Respondent's prayer for
specific performance was maintainable notwithstanding the absence of an
explicit declaratory prayer. It was submitted that the Learned Arbitrator
cannot be faulted for relying on this case as the Learned Arbitrator has
applied his mind and discussed the issue and, he has noted that-
"there are specific issues regarding the alleged termination
and the parties have led evidence on such issue and the
same is also relevant for the purpose of grant of decree of
specific performance. Thus, the suit cannot be dismissed
merely on the ground that no declaration has been prayed
for holding the termination by the claimant as illegal...."
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192. Therefore, this court does not find that there is any impediment to allow
the specific performance of contract in absence of an explicit declaratory
prayer.
ISSUE NO. 8: -COSTS
193. It was argued that the arbitrator cannot award costs in an arbitral
proceeding without any prayer and unless the parties otherwise agree.
194. Learned Sr. Counsel representing the petitioner argued that the
amendments made to this Act by the Arbitration and Conciliation
(Amendment) Act, 2015 shall not apply to
i. the arbitral proceedings commenced before the commencement of the
Act;
ii. court proceedings arising out of or in relation to such arbitral
proceedings, irrespective of whether such court proceedings are
commenced prior to or after the commencement of the Act;
195. The amendments shall apply only to arbitral proceedings commenced on
or after the commencement of the Act and to court proceedings arising out
of, or in relation to, such arbitral proceedings. In the instant case, the
Learned Arbitrator awarded huge costs without varying and/or hearing
the parties, along with exorbitant interest @ 18 % per annum is not
tenable in law.
196. In reply, the Learned counsel for the respondent vehemently denies the
contention of the Petitioner and further drew attention to section 31(8) of
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the pre-amendment Act, which gives power to the Arbitrator to award
costs on the basis of expenses incurred by the respondent in the
proceeding prior to, or during the arbitration proceedings. An arbitrator
can even award costs for future contingency if required.
197. The Tribunal herein awarded costs only in favour of the Respondent,
noting that the advocate's fees and incidental expenses had already been
paid by cheque, supported by ledger copies, vouchers, and invoices.
198. The Learned Arbitrator has come to a factual finding that there was no
reason to disbelieve the costs incurred by the Respondent in connection
with the arbitration proceedings, when it was paid through and only
through cheques. The Petitioner did not deny this; rather, it was agreed
between the parties that pursuant to the Arbitrator's directions on the last
sitting, both parties would have submitted their respective statement of
costs.
199. Section 19 (2) of the said Act permits the parties to agree on the procedure
to be followed by the Arbitrator Tribunal. Pursuant to the procedure
agreed, both parties submitted their statement of costs. It will appear from
the cost statements that both parties have prayed for costs incurred for
their Learned Advocates.
200. It is submitted that section 31(8) of the said Act and the explanation as it
stood before the 2015 amendment also included costs for expenses
incurred in connection with the arbitration proceedings. The phrase 'in
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connection with' is very wide and will include within its ambit any cost
incurred in connection with the subject matter of disputes .
201. There was no bar in the earlier Section 31(8) for awarding of costs
incurred in Court proceedings, which was connected to the arbitration
proceeding. Therefore, even if the Learned Arbitrator was to follow Section
31(8) of the pre-amendment section, there is no reason why costs for the
court proceedings could not have been granted.
202. It was further submitted that section 31A, which has been introduced by
the Amendment Act of 2015, is a salutary amendment and only
particularises the element of cost which will be included. This does not in
any manner restrict the provision of cost which was there in the original
Section 31(8) of the said Act.
203. The petitioner has placed reliance on Section 87 of the said Act, which
was brought in by amendment in 2019. However, the said amendment
was struck down by the Hon'ble Supreme Court in the case of Hindustan
Construction (supra) particularly paragraph 63 thereof, which is set out
hereinbelow: -
"63. Also, it is important to notice that the Srikrishna
Committee Report did not refer to the provisions of the
Insolvency Code. After the advent of the Insolvency Code on
1-12-2016, the consequence of applying Section 87 is that
due to the automatic stay doctrine laid down by judgments
of this Court--which have only been reversed today by the
present judgment--the award-holder may become insolvent
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by defaulting on its payment to its suppliers, when such
payments would be forthcoming from arbitral awards in
cases where there is no stay, or even in cases where
conditional stays are granted. Also, an arbitral award-holder
is deprived of the fruits of its award--which is usually
obtained after several years of litigating--as a result of the
automatic stay, whereas it would be faced with immediate
payment to its operational creditors, which payments may
not be forthcoming due to monies not being released on
account of automatic stays of arbitral awards, exposing such
award-holders to the rigors of the Insolvency Code. For all
these reasons, the deletion of Section 26 of the 2015
Amendment Act, together with the insertion of Section 87 into
the Arbitration Act, 1996 by the 2019 Amendment Act, is
struck down as being manifestly arbitrary under Article 14 of
the Constitution of India."
204. The question of interference by this court under Section 34 is limited. In
the same judgment at paragraph 66 indicates that the law laid down in
BCCI v. Kochi Cricket Pvt. Ltd.53 is stated to be the correct law, and also
holds that the salutary amendments of the Act, 2015, will apply to all
court proceedings.
205. Insofar as the cost is concerned, this court finds that the Tribunal has
awarded costs assessed at Rs. 8,15,73,616/-, out of which Rs.
5,07,99,632 is on account of the arbitration and Rs. 3,07,73,984, on
account of court proceedings as decided in the Award. The said total cost
(2018) 6 SCC 287
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was to be paid by the Petitioner with interest @ 18% from the date of the
Award, till the actual payment.
206. The Act was/is very clear on the costs, that the arbitrator has the power
to impose costs. Both Section 31 of the Arbitration Act, 1996 (unamended)
prior to 2015 as well as post the amendment of 2015, Section 31A are
very clear on awarding costs in the proceedings pending before the
Tribunal.
207. The relevant provisions stipulated in the Said Act with regard to the cost
of the arbitral proceedings are set out hereunder for the sake of
convenience:
208. Section 31 (pre-amendment) of the Arbitration and conciliation Act, 1996
reads as follows:
"Form and contents of arbitral award. -- (1) An arbitral
award shall be made in writing and shall be signed by the
members of the arbitral tribunal.
(2) For the purposes of sub-section (1), in arbitral proceedings
with more than one arbitrator, the signatures of the majority
of all the members of the arbitral tribunal shall be sufficient
so long as the reason for any omitted signature is stated.
(3) The arbitral award shall state the reasons upon which it
is based, unless--
(a) the parties have agreed that no reasons are to be given,
or
(b) the award is an arbitral award on agreed terms under
section 30.
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(4) The arbitral award shall state its date and the place of
arbitration as determined in accordance with section 20 and
the award shall be deemed to have been made at that place.
(5) After the arbitral award is made, a signed copy shall be
delivered to each party.
(6) The arbitral tribunal may, at any time during the arbitral
proceedings, make an interim arbitral award on any matter
with respect to which it may make a final arbitral award.
(7) (a) Unless otherwise agreed by the parties, where and in
so far as an arbitral award is for the payment of money, the
arbitral tribunal may include in the sum for which the award
is made interest, at such rate as it deems reasonable, on the
whole or any part of the money, for the whole or any part of
the period between the date on which the cause of action
arose and the date on which the award is made.
[(b) A sum directed to be paid by an arbitral award shall,
unless the award otherwise directs, carry interest at the rate
of two per cent. higher than the current rate of interest
prevalent on the date of award, from the date of award to
the date of payment.
Explanation. --The expression "current rate of interest" shall
have the same meaning as assigned to it under clause (b) of
section 2 of the Interest Act, 1978 (14 of 1978).]
[(8) The costs of an arbitration shall be fixed by the arbitral
tribunal in accordance with section 31A.] Explanation. --For
the purpose of clause (a), "costs" means reasonable costs
relating to--
(i) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
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(iii) any administration fees of the institution supervising the
arbitration, and
(iv) any other expenses incurred in connection with the
arbitral proceedings and the arbitral award."
209. Section 31A (post-amendment) of the Arbitration and conciliation Act,
2015 reads as follows:
"31A. Regime for costs. -- (1) In relation to any arbitration
proceeding or a proceeding under any of the provisions of
this Act pertaining to the arbitration, the Court or arbitral
tribunal, notwithstanding anything contained in the Code of
Civil Procedure, 1908 (5 of 1908), shall have the discretion to
determine--
(a) whether costs are payable by one party to another;
(b) the amount of such costs; and
(c) when such costs are to be paid.
Explanation. --For the purpose of this sub-section, "costs"
means reasonable costs relating to--
(i) the fees and expenses of the arbitrators, Courts and
witnesses;
(ii) legal fees and expenses;
(iii) any administration fees of the institution supervising the
arbitration; and
(iv) any other expenses incurred in connection with the arbitral or
Court proceedings and the arbitral award.
(2) If the Court or arbitral tribunal decides to make an order
as to payment of costs, --
(a) the general rule is that the unsuccessful party shall be
ordered to pay the costs of the successful party; or
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(b) the Court or arbitral tribunal may make a different order
for reasons to be recorded in writing.
(3) In determining the costs, the Court or arbitral tribunal
shall have regard to all the circumstances, including--
(a) the conduct of all the parties;
(b) whether a party has succeeded partly in the case;
(c) whether the party had made a frivolous counterclaim
leading to delay in the disposal of the arbitral proceedings;
and
(d) whether any reasonable offer to settle the dispute is
made by a party and refused by the other party.
(4) The Court or arbitral tribunal may make any order under
this section including the order that a party shall pay--
(a) a proportion of another party's costs;
(b) a stated amount in respect of another party's costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings;
and (g) interest on costs from or until a certain date.
(5) An agreement which has the effect that a party is to pay
the whole or part of the costs of the arbitration in any event
shall be only valid if such agreement is made after the
dispute in question has arisen."
210. Therefore, from the above provisions, it is crystal clear that the Tribunal
has had the power to award costs, both under the pre- and post-
amendment law. However, the process to calculate the actual costs
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depends on the expenses incurred by the parties in the proceedings,
either before or even during arbitral proceedings.
211. The calculating of costs may be done with discretion vested in the
Arbitrator, to be exercised judicially and based on evidence. Cost should
be awarded in favour the successful party and if the costs are fixed in an
extravagant or exorbitant manner, that may amount to misconduct
sufficient for setting aside the award. Arbitrator should record his reasons
for the same. In this case the respondent became successful.
212. As has been rightly submitted that it is the duty of the Arbitrator to
quantify the costs assessed in an award. The Respondent herein, being
successful, was awarded costs supported by proof. The Petitioner did not
dispute these payments. The Arbitrator allowed costs with interest @18%
per annum from the date of the award, till actual payment.
CONCLUSION AND DIRECTIONS:
213. In the light of aforesaid discussion and analysis, this court is of the
opinion that the finding of the Arbitrator corrects, legal and without any
perversity. The application filed under Section 34 of the Act,1996 by the
petitioner is devoid of merits. The Award dated October 27, 2020 made
and published by the Arbitrator is hereby affirmed.
214. Consequentially, A.P (Com) No.191 of 2024 (A.P.No. 54 of 2021) and
EC/231/2021, are, thus, dismissed with above observations.
215. There shall be no order as to costs.
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216. Connected application(s) being GA 1 of 2022 in EC/255/2022 and G.A
1 of 2023 in AP-COM/191/2024 are also, thus, dismissed.
217. Execution case being EC 255 of 2022 is, thus, allowed with the above
observations.
218. The Petitioner is directed to strictly comply with the directions mentioned
in the Award dated October 27, 2020, made and published by the
Arbitrator in letter and spirit in the timeframe therein. In default, the
Registrar or his nominated officer, not below the rank of Assistant
Registrar, Original side, High Court at Calcutta, is directed to execute the
deed of conveyance in favour of the respondent (SBPL), if the petitioner
fails to do as directed by the Arbitrator in the Award, within a fortnight.
219. All the costs and expenses, for effecting the deed of conveyance at the
office of the Registrar of Assurance, Hyderabad, shall be borne by the
respondent.
220. Parties to act on the server copy of the judgment and order, duly
downloaded from the website of this Hon'ble High Court.
221. Urgent photostat certified copy of this Judgment, if applied for, is to be
given as expeditiously to the parties on compliance of all legal formalities.
(Ajay Kumar Gupta, J)
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Later:
After pronouncement of the Judgment, the learned counsel
appearing on behalf of the petitioner prays for stay of the operation of the
Judgment and Order.
Such prayer is considered and rejected.
(Ajay Kumar Gupta, J.)
P.A.
