M/S. Hindustan Trading Company vs Delhi Development Authority
2009 Latest Caselaw 3760 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+     OMP No.537/2009 (U/s.34 of the Arbitration Act, 1996)



%                 Date of decision: September, 15th, 2009


M/S. HINDUSTAN TRADING COMPANY                         ....Petitioner

                        Through: Mr. . Parvinder Chauhan, Advocate

                               Versus

DELHI DEVELOPMENT AUTHORITY                          ... Respondent

                        Through: None.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?   No

2.    To be referred to the reporter or not?    No

3.    Whether the judgment should be reported
      in the Digest? No


RAJIV SAHAI ENDLAW, J.

1 This petition under Section 34 of the Arbitration Act, 1996 is

preferred with respect to the arbitral award dated 16th June, 2009 of

Mr. Ashok Kumar, Vice Chairman of the DDA dismissing the claims

of the petitioner against the respondent DDA.

2 The petitioner was the highest bidder in an auction held by the

DDA for allotment of Idle Truck parking site at Timarpur. Pursuant

to acceptance of the bid, the petitioner was put into possession of the

said parking site and it is the admitted position that the petitioner

remained in possession of the same for the term of the license i.e. for

three years. It is also the admitted position that the petitioner has

paid license fee to the respondent / DDA for the said period of three

years as per its bid. The license deed executed between the parties

provided for arbitration.

3 It was the case of the petitioner that the aforesaid parking site

had encroachment to the extent of 40% and thus the area available

to the petitioner for parking was 40 % less and thus the petitioner

became entitled to remission of the license fee. The petitioner from

time to time made several representations to the respondent / DDA

claiming the said remission or calling upon the DDA to remove the

encroachment. Ultimately claim for approximately Rs.40 lacs on

account of remission of license fee for a period of three years on the

basis of 40% encroachment together with interest on the excess

license fee paid, was made. It is the said claim of the petitioner

which has been rejected by the arbitrator.

4 The arbitrator has in the award upheld the contention of

petitioner that there was an encroachment leading to reduction in

parking area available of 37% and which was subsequently on

removal of some encroachment reduced to 26.52%. As far as the

said finding (i.e. of encroachment of less than 40%) is concerned, the

same being a matter of fact is not interfereable in proceedings under

Section 34 of the Act. The petitioner also has not seriously

challenged the same.

5 The arbitrator has notwithstanding the encroachment declined

the claim of the petitioner for the reason, inter alia that the

petitioner as per the notice inviting tenders was required to, before

making the bid, inspect the site; it was held that the petitioner must

have made the bid with knowledge of the encroachment and it was

not the case of the petitioner that the encroachment was made after

he had made the bid; the arbitrator further held that even if the

encroachment had been made between the date of inviting the bids

and date of delivery of possession, the petitioner ought not to have

taken possession if had found his bid unviable for the reason of such

encroachment. The arbitrator has further held that the petitioner

thus must have made the bid as per which the payments have been

made, knowing the viability thereof and cannot seek remission of the

same. The arbitrator has next held that the petitioner could not be

allowed the remission inasmuch as that would amount to subverting

the whole process of inviting the bids and the auction. It has been

held that if the bid amount was allowed to be reduced as contended

by the petitioner, it would tantamount to bestowing an unfair

advantage to the petitioner over the other bidders. The arbitrator

has lastly held that inspite of the encroachments continuing, after

expiry of the term of three years of the petitioner, the license fee bid

for subsequent period for the same parking site was nearly double of

that being paid by the petitioner. The same was also held to be a

ground not entitling the petitioner to any remission.

6 The grievance of the petitioner is as follows. Firstly, it is

contended that the arbitrator has not followed the due procedure. It

is contended that only one hearing was held and that the response of

the respondent / DDA to the claims of the petitioner was not even

placed before the arbitrator on the date of the said hearing or

supplied to the petitioner; that the petitioner had no opportunity of

meeting the said response of the respondent; that in fact the

petitioner obtained copy of the same only after the award. It is also

contended that the award is exactly the same as the

response/comments of the respondent/DDA and which showed non-

application of mind on the part of the arbitrator.

7 Secondly, it is contended that the practise of giving remission

with respect to such parking sites owing to encroachment is a well

established pratise; the counsel for the petitioner contends that such

remissions have been given in a large number of cases regularly and

there are over a hundred orders of the courts granting such

remission. Reference is also made in the OMP itself to at least two

orders of this court made in writ petitions, though the copies of the

said orders have not been supplied. The counsel thus contends that

the award is contrary to substantive law.

8 Lastly, it is contended that the award ought to shock the

judicial conscience of this court inasmuch as the petitioner has been

treated unfairly qua others who have been granted a remission.

Reliance in this regard is placed on Paragraph 12 of DDA Vs. R.S.

Sharma & Co. 2008 X AD (SC) 393.

9 As far as the plea of the arbitrator not following the procedure

is concerned, Section 19 of the Act permits the arbitrator to

determine his own procedure. It is not the case that the parties in

the present case had agreed to any procedure which has not been

followed by the parties. Though on the basis of the averments made,

principles of natural justice appear to have been violated but in the

OMP nothing has been stated as to what prejudice has been suffered

by the petitioner owing to being not furnished copy of the response

of the DDA or no hearing thereon being given to the petitioner. The

counsel for the petitioner has during the hearing also not disclosed

as what would have been the rejoinder or contention of the

petitioner to the reply/response of the DDA or as to how it could have

altered the reasoning given in the award without it being pleaded

and established that had opportunity been given, the arbitrator could

not have arrived at the findings reached, no ground of deprivation of

opportunity or irregularity in procedure can be agitated.

10. The petitioner has not even controverted the finding of the

arbitrator of the site remaining encroached and fetching nearly

double the license fee after the expiry of the term of the petitioner.

Without any prejudice having been shown to have been caused to the

petitioner owing to the irregularity in procedure alleged, no case on

that ground under Section 34 of the Act is made out. The reasoning

given in the award is based on the admitted documents and cannot

be faulted with.

11 I have also inquired from the counsel for the petitioner as to

whether the area in sq. yds./sq. mts. of the parking site was

disclosed in the notice inviting tender. The counsel for the petitioner

has fairly stated that though the area was not disclosed but the DDA

maintains a register in which the area in square yards/square metres

of each parking site is mentioned and since it is the same set of

people who usually participate in the bids for the parking sites, they

are in the know of the said area and make their bids accordingly. It

is also admitted that the encroachment was existing on the date of

the making of the bid by the petitioner. The counsel however

contends that the respondent being a state, the petitioner expected

that the encroachment would be removed at the time of possession

else the remission as per practise shall be given. It is further

contended that the arbitrator being the Vice Chairman of the DDA

itself was aware of the practise and ought not to have made the

award in contravention thereof.

12 The arbitrator has made the award in accordance with the

contract between the parties and as per which contract the

petitioner had agreed to make the payments at the rates made and I

find nothing contrary to substantive law of the land, in the award

holding the petitioner not entitled to wriggle out of the said contract.

The reasoning given by the arbitrator that if the petitioner is

permitted to do so it would subvert the auction is also found to be

cogent. Even if the petitioner had any expectation that the

encroachment shall be removed before the delivery of possession,

there is nothing to show that the bid of the petitioner was subject to

any such condition or the petitioner prior to taking possession made

any such demand on the respondent. The petitioner after entering

into possession of the parking site on the basis of the bid, cannot be

permitted to wriggle out of the same. Had the petitioner made the

said intention known, the respondent could have re-auctioned the

site and given equal opportunity to the other bidders also to make a

bid with the existing encroachment. Similarly the logic adopted by

the arbitrator that as per the terms of the notice inviting tender the

petitioner was required to inspect the site is found to be sound.

13 There is yet another aspect of the matter. The petitioner, upon

the respondent/DDA not agreeing to reduce the license fee had the

option to terminate the contract and walk out of the parking site.

The petitioner did not do so. It appears that the bid made by the

petitioner was viable and that is why the petitioner allowed the

contract to run for its entire length and subsequently wanted refund

of nearly half of the license fee paid also.

14 The counsel for the petitioner has lastly urged that the

petitioner has been very fair to the respondent in the matter of

paying the license fee as per contract. It is urged that most of the

contractors stop paying the license fee on such grounds. However

this court in the exercise of jurisdiction under Section 34 cannot

enter into such aspects. There is nothing to shock the judicial

conscience of this court also. The petitioner with its eyes open had

made the bid and carried on business on the terms agreed. It is the

petitioner which was by making claims for remission seeking to put

the respondent in a disadvantageous position.

14 No ground under Section 34 of the Act for issuance of the

notice is made out. Petition is dismissed. No order as to costs.

RAJIV SAHAI ENDLAW (JUDGE) September 15, 2009 J