M/S S.S. Bedi & Sons vs Delhi State Industrial ...
2009 Latest Caselaw 3961 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                 OMP 110/2001

%                     Date of decision: 25th September, 2009

M/S S.S. BEDI & SONS                                   ....Petitioner
                        Through: Mr.P.S. Mahindroo, Advocate

                                Versus

DELHI STATE INDUSTRIAL DEVELOPMENT
CORPORATION LTD                 ... Respondent
                        Through: Ms Anusuya Salwan, Advocate.


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          No
      in the Digest?


RAJIV SAHAI ENDLAW, J.

1. The petition has been preferred under Section 34 of the

Arbitration Act, 1996 with respect to the arbitral award dated 9 th

February, 2001 of Shri Surinder Gandotra, sole arbitrator DSIDC

(Respondent). Notice of the petition was issued to the respondent

and arbitral record called. The counsel for the parties have been

heard.

2. The respondent/DSIDC had vide and on the terms and

conditions contained in a printed brochure, invited applications for

allotment of industrial sheds. The petitioner, a partnership firm, is

stated to be one of the applicants. It is the case of the petitioner that

at the time of making the application, the petitioner firm comprised

of three partners, namely, Shri Jasbir Singh Bedi, Shri Sarabjit Singh

Bedi and Shri Gurpreet Singh Bedi. The petitioner subsequently

informed the respondent that Shri Jasbir Singh Bedi had retired from

the partnership and as such allotment was sought in the name of the

petitioner with Shri Sarabjit Singh Bedi and Shri Gurpreet Singh

Bedi only as partners. The respondent asked the petitioner for

payment of transfer charges for effecting the aforesaid change in

constitution of the petitioner firm and which the petitioner

controverted, leading to the respondent not accepting the balance

payments for allotment stated to have been tendered by the

petitioner and also not making the allotment in favour of the

petitioner or delivering possession of the shed to the petitioner. The

brochure containing the terms and conditions on which applications

for allotment were invited inter alia provided that dispute, if any,

regarding allotment clause or any other terms and conditions shall

be referred to the sole arbitration of the person to be appointed by

the Chairman-cum-Managing Director of the respondent. The

petitioner invoked the arbitration clause and the respondent

appointed the arbitrator.

3. The arbitrator has held that the petitioner had paid sums of Rs

55,000/- and Rs 2,16,625/- to the respondent towards provisional

allotment and as first instalment; that the allotment of industrial

shed had been made by the respondent in favour of the petitioner

firm on the basis/strength of qualification of Shri Jasbir Singh Bedi

who had ceased to be the partner of the petitioner firm; that the

terms and conditions on which applications for allotment were

invited contained the eligibility criteria and the said eligibility

criteria was met by Shri Jasbir Singh Bedi only; that under the

guidelines for Management of Industrial land managed by Delhi

Administration, the respondent was justified in claiming the transfer

charges, claimed from the petitioner firm on the re-constitution as

aforesaid of the petitioner firm; that if the petitioner wanted

allotment in favour of the new firm, they had to pay transfer

charges, else forfeit the monies deposited; that the petitioner is also

liable to pay the ground rent and other charges for the reason of

having held up allotment of the said shed. The arbitrator thus

directed the petitioner to pay Rs 17,36,218.12p to the respondent

within one month of the award towards balance costs, transfer

charges, watch and ward charges, ground rent charges etc with

respect to the shed and together with interest at 18% per annum

from 1st September, 2000 till the date of payment and upon which

payment the respondent was directed to hand over the possession of

the shed and execute necessary documents in favour of the

petitioner. The award further directs that in case the petitioner fails

to pay the said amount within a month from the award, the

respondent shall be entitled to recover the sum of Rs 17,36,218.12p

and the petitioner shall then cease to have any rights with respect to

the shed allotted to it and the respondent shall be entitled to allot it

to anyone else.

4. Though the petition has been pending for the last over eight

years but the petitioner has neither claimed any relief/interim

measure of restraining the respondent from allotting the shed to any

other person nor taken any other step showing its inclination to take

possession of the said shed. The counsel for the respondent, on

inquiry, on instructions, informed that the respondent by way of

abundant caution had not allotted the said plot to any other person.

5. The petitioner has in the petition under Section 34 challenged

the award inter alia on the ground that the arbitrator did not give

any opportunity to the parties to lead any evidence or to cross

examine witnesses of each other; that the remaining partners of the

firm also fulfilled the eligibility criteria for allotment as per the

brochure and/or corrigendum thereto which has not been considered

by the arbitrator; that the retirement of one of the partners did not

amount to transfer of the shed requiring payment of transfer

charges; that there was no provision, in the brochure inviting

applications for allotment, of levy of transfer charges; that in any

case since the allotment of the plot had not taken place in favour of

the petitioner, the arbitrator was wrong in directing the petitioner to

pay the watch and ward charges and ground rent charges etc with

respect to the plot; that the arbitrator was to determine the disputes

as arising from the brochure for allotment but had decided the

disputes de hors the same.

6. The counsel for the petitioner has during arguments, also

contended that the arbitrator has not discussed any terms of the

brochure and has also erred in applying the guidelines meant for

industrial plots to industrial shed which is the subject matter in the

present case. It is further contended that no question of payment of

transfer charges could arise before a definite allotment had been

made and possession delivered. It is contended that even the draw

of lots had not taken place till the change aforesaid in the

constitution of the petitioner.

7. The counsel for the respondent has on the contrary argued that

the award is a reasoned one; that the arbitrator has considered all

the documents and given a reasoning/basis for his award and the

same does not permit any interference under Section 34 of the Act.

8. I may also add that the counsel for the petitioner, during the

hearing on 13th August, 2009, urged that the petitioner was mainly

aggrieved by the direction in the award for recovery of

Rs 17,36,218.12p from the petitioner in any case, even if the

petitioner was to not opt for the shed. However, subsequently it was

argued that since the shed has not been allotted by the respondent

to anyone else till date, the petitioner is also interested in the shed.

However, the levy of transfer charges and recovery of ground rent,

watch and ward charges etc from the date of allotment and interest

from 1st September, 2000 onwards is disputed.

9. A perusal of the brochure inviting applications for allotment

shows that the same did provide for eligibility for allotment. It is

also agreed that a corrigendum was brought out by the respondent

with respect to the eligibility criteria. However, the findings in the

award, of the petitioner matching/fulfilling the eligibility criteria on

the strength of the qualifications of Shri Jasbir Singh Bedi and being

otherwise not eligible for allotment are factual findings and Section

34 of the Act does not permit this court to foray into correctness or

otherwise of such factual findings. That being the position, it brings

me to the next stage of the dispute as to the levy of transfer charges.

The arbitrator has given his reasons for upholding the claim of the

respondent for transfer charges. The arbitrator while holding so has

referred to the guidelines for management of industrial land

managed by Delhi Administration. True, the brochure does not

provide for transfer. However, the brochure refers to the policy of

the respondent. The respondent even otherwise being a State within

the meaning of Article 12 of the Constitution of India, has to act by

its Rules and not arbitrarily. If the policy of the respondent is not to

permit the transfers or to permit such transfers on payment of

transfer charges, then it cannot be said that merely because of the

detailed terms and conditions or the policy of the respondent is not

set out in extenso in the brochure, the respondent will not be entitled

to apply the same to such allotments. Even otherwise it is well

known that such allotments are in the form of largesse. The purport

of such allotments was to encourage industrialization in a particular

class/category of people who were deemed to be in need of

encouragement. Thus, the petitioner cannot be heard to say that the

arbitral award which has upheld the respondent's claim for transfer

charges on the basis of the policy/guidelines of the Delhi

Administration is contrary to public policy or to any substantive law.

10. There is another aspect of the matter. The brochure, if not

providing for levy of transfer charges, does not even permit

transfers. Once an eligibility criteria is laid down and the allotment

has been made in favour of the applicant i.e. a firm with a particular

constitution, the law does not permit any transfer. The petitioner

which admittedly has a different constitution in the absence of any

clause in the brochure permitting transfer would not be entitled to

the allotment and hence the question of correctness or otherwise of

the levy of transfer charges also would not arise. Thus, I do not find

anything wrong with the arbitral award upholding the levy of

transfer charges.

11. As far as the award directing the petitioner to pay the ground

rent and watch and ward charges is concerned, the same is also not

found to be contrary to public policy or to any law. Once the

petitioner is found liable to pay transfer charges, the respondent

ought to be put into the same position in which it would have been

had the transfer charges demanded been paid at the time of demand.

If the transfer charges had been paid at that time, the petitioner

would have been put into possession of the shed, would have become

liable for payment of ground rent with respect thereto and the

respondent would not have incurred the watch and ward charges

also with respect to the said shed. Thus nothing wrong can be found

with the award, while giving the petitioner option to take possession

of the shed, directing the petitioner to pay besides the remaining

premium and transfer charges, also the ground rent and watch and

ward charges with respect to the shed. The award to that extent

does not call for any interference.

12. The petitioner having not availed of the option and being even

today not willing to make the payment, brings me to the alternative

award i.e., of the petitioner, even without opting to take

allotment/possession, being still liable for the transfer charges,

balance premium, watch and ward charges, ground rent etc. This

part of the award is found to be contrary to law and being without

any basis and severable from the remaining award. Once it is held

that the petitioner was liable to pay the transfer charges and had

failed to pay the same, the petitioner did not become entitled to the

allotment of the shed and there can be no basis whatsoever for the

arbitrator to direct the petitioner to pay the balance premium as well

as the transfer charges and other charges with respect to the shed.

When there is to be no allotment and no transfer, the question of the

petitioner being liable to pay the balance premium and transfer

chargers does not arise. That part of the award is liable to be set

aside.

13. In fact once it is found that the applicant had ceased to exist,

no case for forfeiture of the amount paid till then also arises. The

applicant or the remaining partners of the applicant would become

entitled to refund of the monies deposited till then.

14. I have in UOI VS. Modern Laminators, MANU/DE/1237/2008

held that the court in the exercise of powers under Section 34 of the

Act is entitled to modify the award.

15. Accordingly, the part of the award requiring the petitioner to

pay Rs 17,36,218.12p within one month, to be entitled to allotment

in the name of reconstituted firm is upheld. The petitioner having not

availed of the said option within the time permitted in the award, the

said option is now not available to the petitioner. The alternative

award of holding the petitioner liable to pay the sum of Rs

17,36,218.12p to the respondent in any case even without being

entitled to the shed is set aside and the said part of the award is

modified by directing the respondent to refund to the petitioner the

sum of Rs 55,000/- and Rs 2,16,625/- admittedly received, together

with simple interest at 6% per annum from 13th July, 1998 when the

payments were demanded by the respondent from the petitioner and

the petitioner failed to pay the same. The said rate of interest has

been fixed keeping in mind that the shed remained unutilized for

reasons attributable to the petitioner.

16. With the aforesaid directions, the petition is disposed of. The

parties are left to bear their own costs.

RAJIV SAHAI ENDLAW (JUDGE)

September 25th , 2009 M