Mr. Narinder Saxena vs Mrs. Meenu Sahni
2006 Latest Caselaw 867 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The respondent is the owner of property bearing No. A-13, Vikas Puri, New Delhi. The petitioner and the respondent entered into an Agreement to Sell/Purchase on 26.7.1997 for the petitioner to purchase the property on the terms and conditions set out in the Agreement. The Agreement contained an Arbitration Clause. The transaction ultimately did not mature and in view of the disputes between the parties, the petitioner filed proceedings before this Court seeking a reference of disputes to Arbitration. In terms of order dated 20.3.2001 Justice A.K. Srivastava, (Retired) was appointed as the Sole Arbitrator. The Arbitrator entered upon reference and made and published his award dated 11.3.2003. The petitioner aggrieved by the same has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said Act).

2. The Agreement to Sell/Purchase stipulated the total consideration of Rs. 79 lakh out of which Rs. 10 lakh was to paid by the petitioner as earnest money. The Agreement also provided that a sum of Rs. 5 lakh would be paid on 10.8.1997 and Rs. 45 lakh on 26.10.1997, when the respondent was required to execute the sale documents in favor of the petitioner or his nominee. The time period for completion of the transaction was stipulated up to 31.12.1997. The vacant physical possession of the basement and second floor was to be delivered at the time of registration of the sale document and the balance portion was to be delivered on receipt of the remaining consideration of Rs. 19 lakh.

3. The penalty clause in the Agreement stipulated that in case the petitioner defaults, the respondent was liable to forfeit the amount of Rs. 10 lakh, while for the default of the respondent double the amount was liable to be paid to the petitioner amounting to Rs. 20 lakh.

4. The only obligations really complied in pursuance to the sale were the payment of earnest money and the payment of the further amount of Rs. 5 lakh on 7.8.1997. The petitioner claimed that the amount of Rs. 45 lakh was offered on 26.10.1997 but the respondent refused to accept the same on account of non-availability of the alternative accommodation for her to shift with the family. An endorsement was made on the Agreement to Sell that the full and final payment would be received on or before 31.12.1997 and the sum of Rs. 45 lakh was not to be received before the final payment. Not only that the respondent is alleged to have approached the petitioner in the month of December 1997, expressing her inability to complete the transaction for three to four months due to non- availability of alternative accommodation and the impending exams of the children of the respondent. The petitioner sent a legal notice dated 18.12.1997. On 30.12.1997, the petitioner received a telegram from the respondent for execution of the sale documents in terms of the Agreement pursuant whereto the petitioner claims to have sent a reply to the telegram on the same day and presented himself in the Office of the Sub-Registrar on 31.12.1997 but the respondent did not arrive. The respondent is alleged not to have furnished Form 37-I to the Income Tax Authorities as was mandatory at that stage of time under Section 269UC of the Income Tax Act, 1961. This position was contested by the respondent who has alleged lack of funds with the petitioner and the factum of seeking three to four months in December 1997 was denied. However, the respondent is stated to have admitted that she wanted adjustment for a fortnight from January 1998 due to pre-board exams of her daughter, which was not agreed to by the petitioner and that the husband of the respondent had arranged for suitable alternative accommodation on rent w.e.f. 1.1.1998. On the issue of Form-37-I it was alleged that the same had to be signed by both the parties and the petitioner failed to come forward to sign the same.

5. The Arbitrator examined the evidence on record and came to the conclusion that the respondent was entitled to forfeit the amount of Rs. 10 lakh of earnest money as had been done but the further payment of Rs. 5 lakh could not be retained by the respondent.

6. One of the controversies which arose during the Arbitral proceedings was on account of the endorsement made on the Agreement. The Arbitrator found that the entire endorsement was in the hand writing of the husband of the respondent and it was thus found that the statement given by the husband of the respondent on oath was a false statement. This arose on account of the allegation of the respondent as to what was the nature of the endorsement. The endorsement as per the petitioner was: ?the full and final payment shall be received by the first party on or before 31.12.1997 and Rs. 45 lakhs payable on 26.10.1997 shall not be received before the final payment?. The respondent on the other hand had claimed that the word ?not? appearing after ?shall? had been interpolated. However, in her testimony the respondent subsequently admitted that the words ?shall not? were in the hand writing of the husband of the respondent, who had, in fact, made the said endorsement. Despite this finding the Arbitrator concludes that no adverse conclusion is to be arrived at against the respondent on the basis of false statement made by her husband as the respondent had accepted the endorsement.

7. The Arbitrator concluded that the effect of the endorsement was that the entire payment of Rs. 64 lakh was to be taken at once and thus the modification of the Agreement was that the sum of Rs. 45 lakh was not required to be paid on 26.10.1997. The endorsement was obviously made to relieve the petitioner of the obligation as the respondent wanted more time to comply with the obligations under the Agreement. The effect of this, in the conclusion of the Arbitrator, was that neither was Rs. 45 lakh was to be paid by 26.10.1997 nor the consequent execution of documents by the respondent to take place. Thus a variation was made in the Agreement.

8. The respondent in her cross-examination admitted that she had requested the petitioner to accommodate her up to 15.1.1998 and not to ask her to vacate the possession till that date. The material on record has given rise to a finding by the Arbitrator that an alternative accommodation had been arranged for by the respondent w.e.f. 1.1.1998 in view of the refusal of the petitioner to extend the time beyond 31.12.1997. In fact, the stand of the petitioner was also that he had refused to extend the time.

9. The other aspect of Form 37-I has also been dealt with and the finding is that there is no proof of the respondent having sent the same to the petitioner yet the Arbitrator has concluded that the petitioner had received Form 37-I from the respondent but did not sign it or send it back and this conclusion is arrived at on the basis of certain testimonies.

10. In a nutshell the finding of the Arbitrator is that till 7.8.1997, the parties were abiding by the terms of the Agreement where after things became uncertain. The Arbitrator categorically concluded that ?both the parties were prolonging the execution of sale documents for their respective reasons in their minds?. There is also a finding ?the parties were not serious about their obligations under the Agreement to Sell/Purchase?.

11. The Arbitrator has taken note of the fact that since the respondent had not complied with the terms of the Agreement, the petitioner's stand was that he has also lost interest in the deal and thus was only interested in refund of the amount.

12. On appreciation of evidence the Arbitrator has concluded that the question is as to which of the two parties is to be believed. The Arbitrator finds that the petitioner's case has material contradictions while the stand of the respondent is without blame. The Arbitrator also finds that the conduct of the parties show that time was not the essence of the Agreement.

13. Learned counsel for the petitioner sought to impugned the findings of the Arbitrator on the ground that once time was not found essence of the contract, the amount of earnest money paid by the petitioner could not have been forfeited. Further there was no proof of the respondent having sent Form 37-I to the petitioner and both parties had contributed towards the non-conclusion of the deal. In such a situation the petitioner could not be burdened with forfeiture of the earnest money.

14. Learned counsel referred to the judgment of the Apex Court in Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd. , which has been discussed in a recent judgment of the Apex Court in Civil Appeal No. 3134 of 2004, titled Hindustan Zinc Ltd. Vs. Friends Coal Carbonisation, decided on 4.4.2006. Learned counsel contended that a reading of the aforesaid judgments thus shows that the scope of interference by the Court under Section 34(2) of the said Act has been expanded and the phrase ?public policy of India? has been given a wider meaning. Thus an award which is patently in violation of statutory provisions cannot be said to be in public interest and is likely to adversely effect the administration of justice. An award which is contrary to (a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality; or (d) in addition, if it is patently illegal is liable to be interfered with. However, such illegality must go to the root of the matter and should not be of trivial nature. An award contrary to the substantial provisions of law or the provisions of the said Act or against the terms of the contract would be patently illegal.

15. Learned counsel for the respondent initially sought to contend that the objections were filed beyond time but on the relevant filing date being pointed out did not dispute that the objections have been filed within time.

16. Learned counsel, however, contended that the objections of the petitioner did not fall within the parameters of sub Section (2) of Section 34 of the said Act and this Court is not to do a reappraisal of the evidence. The Arbitrator did find fault with both the parties but thereafter gave a series of reasoning why the stand of the respondent is to be accepted. Thus, merely because this Court may come to an equally plausible conclusion different from that arrived at by the Arbitrator is no ground to interfere with the award.

17. A perusal of the findings given by the Arbitrator, thus, in my considered view show that time was not maintained as essence of the contract when the payment was rescheduled by the respondent herself with the consent of the petitioner. However, on the issue of delivery of possession, the petitioner apparently insisted that the transaction must be completed by 31.12.1997. The Arbitrator found material on record to show that the respondent had in view of the said stand of the petitioner arranged for an alternative accommodation commencing from 1.1.1998.

18. Insofar as the obligation to file Form 37-I is concerned, the same has to be signed by both the parties and cannot be unilateral act of the respondent. Though there was no proof available of the same having been sent by the respondent to the petitioner, on the pleadings and the evidence placed on record, the Arbitrator found that such Form 37-I was sent to the petitioner. The most material aspect taken note of by the Arbitrator is the fact that the petitioner was not really interested in completing the transaction and was only interested in refund of the amount. Once the parties had themselves reduced the significance of time stipulated, it was not open to the petitioner to contend that the money should be refunded back without completing the transaction. The petitioner backed out of the transaction and wanted only refund of money paid ostensibly on the ground that the date of 31.12.1997 was sacrosanct. The Arbitrator did not believe the petitioner that he had genuinely gone to the Sub- Registrar Office to complete the transaction. The petitioner was found not to have shown availability of balance money and was uncertain whether the transaction was to be in his name or his nominee. Once both the parties did not treat time of essence the transaction could have been completed even after 31.12.1997 but the petitioner was not willing to do so.

19. The findings arrived at by the Arbitrator are pure findings on appreciation of the evidence and the undisputed position of law is that this Court does not sit as a Court of appeal over the findings of an Arbitrator. Thus even if this Court was to come to an equally alternative plausible view, it would not be a ground to interfere. The petitioner has not been able to show as to which provision of law or of the Contract was breached nor can the view of the Arbitrator be said to be so perverse as to shock the conscience of this Court.

20. The Arbitrator has taken note of the total payments made and directed the forfeiture only of the earnest money holding the balance amount of Rs. 5 lakh liable to be refunded to the petitioner. The said amount is stated to have been deposited in this Court.

21. In view of the aforesaid I do not find any merits in the objections.

22. Dismissed, leaving the parties to bear their own costs.

23. The amount of Rs. 5 lakh deposited in Court along with accrued interest be released in favor of the petitioner.