Shri Pradeep Saith vs Shri S.K. Mehta
2005 Latest Caselaw 1328 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The petitioner is the owner of property bearing No. A-49, Nizamuddin East, New Delhi and had entered into an agreement dated 25.05.1992 with Sahil Builders for re-development of the property. Subsequently a tripartite agreement was signed dated 18.03.1994 between the petitioner, Sahil Builders and the respondents herein in terms whereof all the rights of Sahil Builders were assigned to the respondent on payment of Rs. 9 lakhs by the respondent to Sahil Builders. On the same day the petitioner and the respondent entered into a property development agreement for the re-deveopment of the property. In terms of the agreement dated 18.03.1994, the development had to be made by the respondent of a two storyed building with terrace. There were two other material terms agreed upon which are relevant for the present disputes : (i) a deed of license by the respondent in favor of the petitioner in the top floor of property No. A-54, Nizamuddin East, New Delhi to provide accommodation for the residence of the petitioner. This property was owned by Ms. Deepa Mehta, daughter of respondent No. 2. (ii) A mortgage of first floor of property No. 2/14A Jungpura, New Delhi, owned by Dalip Mehta, son of the respondent as security for performance.

2. A supplementary agreement dated 19.03.1994 was also executed in terms whereof the respondent took the responsibility of selling the lower ground floor which had fallen to the share of the petitioner. This portion was sold for Rs. 20 lakhs by mutual agreement between the parties herein.

3. The respondent constructed property No. A-54, Nizamuddin East and the petitioner was given possession of the upper ground floor falling to his share as per re-development agreement in September 1999 but he continued to occupy the top floor of A-54, Nizamuddin East.

4. Since there were disputes between the parties in relation to the agreements executed, Justice P.K. Bahri (Retired) was appointed as the sole arbitrator by this Court vide order dated 20.11.2001 in AA No. 278/2000.

5. In the proceedings before the learned arbitrator, the respondent filed an application under Section 17 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `said Act') seeking immediate possession of the portion of A-54, Nizamuddin East as it was the claim of the respondent that the petitioner could not retain possession of the said building as per the terms of the agreement. The right of the respondent to claim such a relief under the provisions of Section 17 of the Act was objected to by the petitioner.

6. The learned arbitrator came to the conclusion that Section 17 of the Act only empowered the arbitrator to take such measures of protection in respect of the property in dispute and thus the relief claimed for by the respondent could not be granted under the said provision. However, the learned arbitrator accepted the plea of the respondent to consider the issue for grant of interim award in view of the provisions of Section 31(6) of the Act which are as under :

"31.Form and contents of arbitral award. - (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. It may be noticed that at this stage Section 2(1)(c) states that an arbitral award includes an interim award.

8. The learned arbitrator came to a finding that in terms of the license agreement 18.03.1994, the accommodation was provided in the top floor of A-54, Nizamuddin East, by the respondent, for the petitioner, his wife and two children. The accommodation was provided temporarily on a license basis till such time as the possession of re-development property was handed over. Not only that in case Ms. Deepa Mehta, daughter of the respondent (owner of the property) required the flat, the petitioner has to hand over possession on getting 5 weeks notice and was in lieu entitled to Rs. 5,000/- per month to enable him to rent out any other accommodation till he gets possession of the redeveloped property. The agreement otherwise provided for handing over and taking over possession of the property simultaneously. Clause 22 of the main agreement also provided so and the arbitrator came to the conclusion that the top floor of property No. A-54, Nizamuddin East was not meant to be a security for performance of obligations under the main agreement and the petitioner could in fact be required to vacate the accommodation even if the property in question remained undeveloped subject to the payment of Rs. 5000/- per month. However, that eventuality did not occur and the petitioner has already occupied the portion in his possession.

9. The plea of the petitioner before the arbitrator was that the MOU dated 01.02.1997 permitted retention of the possession of the top floor of A-54 Nizamuddin East till the building at A-49 Nizamuddin East fully completed. It was alleged that the building had not been completed as there was many deficiencies in constructions and the staircase for the use by the respondent has not been constructed.

10. Learned arbitrator concluded that on account of certain differences arisen between the parties, the same were solved with the assistance of the two senior advocates and the MOU was got executed. Clause (ix) of the MOU stipulates that the petitioner shall hand over possession of top floor of A-54 Nizamuddin East within 15 days of the completion of the building and taking possession of the share of the building A-49 Nizamuddin East, by the petitioner. Since the petitioner had admittedly taken possession of the share of his building and the dispute was about the manner of construction of the staircase which would form the subject matter of the final award, the MOU had not in any manner modified or altered the terms of the license deed and the terms of main agreement. An interim award was thus passed in favor of the respondent directing the petitioner to give physical possession of the flat forthwith to the respondent.

11. The petitioner aggrieved by the said interim award has filed the present petition. It is interesting to note that no formal notice at all has been issued in the present matter and on 11.03.2003 learned counsel for the respondent had stated that he would file reply. The pleadings were completed. On 11.07.2005, my predecessor observed that since objections were filed against an interim award such objections may not be maintainable. However, in view of the submission of the learned counsel for the parties and the provisions of sub-section (6) of Section 31 read with Clause (c) of sub-section (1) of Section 2 of the Act there can be no manner of doubt that the objections would be maintainable. An interim award can be made under sub-section (6) of Section 31. Clause (C) of sub-section (1) of Section 2 clearly stipulates that the arbitral award includes an interim award and thus an application under Section 34 of the Act for setting aside of the arbitral award in the present case is maintainable since an arbitral award includes an interim award.

12. In view of the aforesaid position, it was put to learned counsel for the petitioner, under which clause of sub-section (2) of Section 34 of the Act would he seek to include the present challenge as the scope of interference by the Court in case of arbitral award (or an interim award) is restricted in terms of the said sub-section. Learned counsel submitted that in view of the judgment of the Apex Court in Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd., , an award against public policy or against the terms of the agreement between the parties could be set aside. A reading of the said judgment leaves no doubt that in case an award is contrary to the terms of the agreement between the parties, it can be interfered with. However, it has to be kept in mind that under the garb of such a challenge to the award being contrary to the terms of the contract, the object is not to sit in appeal over the manner of implementation of the agreement as directed by the arbitrator. It is in view of these parameters that the controversies have to be examined.

13. A reading of the property development agreement for re-development dated 18.03.1994, which governs the rights of the parties would show that Clause 22 of the said agreement clearly envisages that the petitioner could be asked to re-deliver possession of Flat No. A-54, top floor, Nizamuddin East on payment of Rs. 5,000/-. The said flat was provided for residence of the petitioner and his family members with the object of providing them accommodation till property No. A-49 Nizamuddin East was capable of occupation by the petitioner. It is not in dispute that the petitioner has occupied his portion of property No. A-49, Nizamuddin East and resides there though of course there are disputes about the feasibility of utilisation of the terrace in view of the problem about the staircase. It may be noticed that the owner's share is entire ground floor (which has been sold by parties with consent), entire upper ground floor (which is in possession of the petitioner) and 50% of the terrace rights (full rights to the rear portion of the terrace). There is also some dispute raised about the quality of construction by the petitioner.

14. A perusal of the license deed dated 18.03.1994 in respect of top floor of property No. A-54 Nizamuddin East, also shows that the petitioner was given accommodation on temporary basis. It would be appropriate to re-produce two relevant clauses on which reliance has been placed by the petitioner :

"3. This accommodationis being temporarily provided to Mr. Saith and his family on a license basis till such a time whn the possession of his re-developed property A-49, Nizamuddin East, New Delhi - 110013, as per the agreement, is handed to him.

5. The handing over and taking over the possession in the proposed building A-49, Nizamuddin East, New Delhi - 110 013 and the redelivery of possession of A-54, Top Floor, Nizamuddin East, New Delhi - 110 013, will be simultaneous."

15. The submission of learned counsel for the petitioner is that handing over and taking over possession was to be simultaneous of the licensed portion as well as the development of property No. A-49 Nizamuddin East. Learned counsel submits that he is entitled to the possession of complete portion as per agreement but the 50% terrace rights cannot be enjoyed by him without a proper staircase. The Memorandum of Understanding arrived at on 01.02.1997 contains the following relevant clauses :

"(iii) In the event the completion of the building is delayed beyond June 30th 1997 by the Builder, then the Builder shall compensate the owner with Rs. 10,000 (Rupees Ten Thousand only) per month from January 31st 1997 onwards till the building is completed.

(vii) The Builder shall provide to the owner a separate external stair way for entry to the portion of the terrace falling to the share of the owner in a convenient and appropriate manner and this shall be undertaken, after completion of the building and shall be completed by December 1997. The present stair way falls exclusively to the share of the Builder.

(ix) The owner shall hand over the possession of Flat A-54 (Top Floor) Nizamuddin East, New Delhi - 110013 to the Builder or his nominee within 15 days of the completion of the building and taking possession of his share of the building A-49, Nizamuddin East, New Delhi - 110013, along with the original documents of title and Mortgage Deed (duly cancelled) dated 18th March 1994 which relate to Flat No. 2/14A, Jangpura - A (First Floor) New Delhi - 110014"

16. A reading of the aforesaid clauses show that the builder has to compensate the owner for delay in construction. A separate external stairway has to be provided. This stairway is a matter of dispute since it is submitted that the respondent was providing only a spiral staircase from outside which was not envisaged. The petitioner's contention is that top floor of Flat No. A-54 Nizamuddin East has to be handed over only on "completion of building" as per clause (ix). Completion of building has not taken place as Completion Certificate is not available. Learned counsel further submitted that there was modification/novation of the earlier agreement by the subsequent memorandum.

17. I am unable to accept the submission of learned counsel for the petitioner for the reason that Clauses cannot be read in isolation and all the agreements have to be read together. Clause (ix) referred to above talks about completion of building and taking over of his share. The petitioner is in occupation of his portion and the only issue is the construction of the staircase and the manner thereof. The respondent has not refused to construct the staircase but the nature of staircase sought to be provided is not acceptable to the petitioner.

18. The most important aspect is that this alternative premises was really meant to provide accommodation for the petitioner till the petitioner was in a position to occupy the property in question. The petitioner has occupied the property and is enjoying possession thereof and the room of A-54 Nizamuddin East has been only locked up and kept as such. This, in my considered view, is not permissible.

19. Another aspect to be kept in mind is that a mortgage deed has been separately executed on 18.03.1994 in respect of first floor of property bearing No. 2/14A Jungpura which is owned by the son of the respondent for due performance of the obligation under the agreement between the parties. Thus there is security provided for performance separately which cannot be mixed up with the issue of possession of top floor of A-54, Nizmuddin East.

20. The matter has been dealt with in depth aforesaid though really speaking it is only a question of interpretation of the agreements made by the arbitrator in respect of which this Court in a petition under Section 34 of the Act does not sit in appeal. I am unable to accept the contention of learned counsel for the petitioner that since the matter now is at a final stage in respect of arbitration proceedings, the interim award should not be given effect to.

21. The petition is without any merit and is dismissed leaving the parties to bear their own costs.