Vipul Ltd & Anr vs Rakesh Gupta
2012 Latest Caselaw 4366 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI


+                       Date of Decision: 24.07.2012


%      FAO(OS) 328/2012

       VIPUL LTD & ANR                                     ..... Appellants
                            Through:      Mr. R.K. Varmani, Senior Advocate,
                                          with Mr. Manish Sharma, Mr. Rohan
                                          Sharma & Mr. Vishal Malhotra,
                                          Advocates.
                       versus


       RAKESH GUPTA                                             ..... Respondent
                            Through:


       CORAM:
       HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
       HON'BLE MR. JUSTICE VIPIN SANGHI


VIPIN SANGHI, J. (Oral)

C.M. No.12428/2012 (Exemption)

Allowed, subject to just exceptions.

FAO(OS) 328/2012 & C.M. Nos. 12427/2012

1. The appellant assails the order dated 20.04.2012 passed by the

learned Single Judge in O.M.P. No. 364/2012, whereby the objections

preferred by the appellant to the arbitral award dated 11.01.2012

passed by the sole Arbitrator, under Section 34 of the Arbitration &

Conciliation Act, 1996 (the Act) have been dismissed.

2. The parties had entered into a contract on 18.01.2005

whereunder the respondent had been allotted Unit No. 102 on the first

floor in Tower No. 3 of "Orchid Petals" - a residential group housing

complex in Sector 4, Gurgaon, Haryana. The appellant is the builder

who had made the allotment to the respondent. It appears that the

respondent made certain payments on 14.07.2005 and 17.11.2004

and consequently, the appellant issued an allotment letter on

18.01.2005 allotting the aforesaid unit having super area of 1724

square feet for a total consideration of Rs.29.82 Lakhs to the

respondent. The respondent was called upon to make certain deposits

which were made on 18.02.2005. It appears that, thereafter, the

respondent defaulted in making payment of subsequent installments.

When the respondent sought to tender payments on 01.05.2006 under

cover of letter sent by speed post, the appellant did not accept the

same. The appellant returned the payment tendered by the

respondent vide a notice dated 03.05.2006 and informed the

respondent that the booking of the apartment in his favour has been

cancelled. The respondent did not accept the said cancellation and re-

tendered the pay orders to the appellant on 31.05.2006, however, the

appellant once again returned the payments tendered by the

respondent on 07.06.2006 and also sought to refund the amounts

earlier deposited by the respondent and accepted by the appellant by

tendering a cheque. In these circumstances the dispute arose

between the parties, and the Court appointed the sole Arbitrator (a

retired Judge of this Court) on 22.02.2007 in O.M.P. No. 322/2006.

3. The respondent claimed the relief of specific performance of the

contract and, in the alternative, a sum of Rs.30 Lakhs as damages

along with refund of the amount received by the appellant.

4. In its defence the appellant pleaded that the payments, even

earlier made by the respondent, were belated, however, they were

accepted and receipt issued. The appellant issued demand letters for

the installment of Rs.2,23,650/- on 01.06.2005 followed by another

letter dated 12.07.2005 but no payment was received. The reminders

were sent on 14.09.2005 and 07.12.2005. By letter of 01.03.2006, the

respondent was asked to make payment of the outstanding amount of

the two installments of Rs.2,23,650/-. A reminder was sent on

22.03.2006 asking the respondent to pay Rs.6,70,950/- which was due

as on 06.04.2006. By letter dated 21.04.2006, the respondent was

asked to pay Rs.8,94,600/- on or before 08.05.2006.

5. The Arbitral Tribunal did not accept the defence of the appellant,

inter alia, on the ground that the appellant itself had granted time to

the respondent vide the letter dated 21.04.2006 to make the payment

on or before 08.05.2006. When the respondent tendered payment on

01.05.2006, the appellant sought to backtrack by refusing to accept

the payment and purporting to terminate the agreement. Accordingly,

the Arbitral Tribunal passed an award directing specific performance of

the agreement between the parties and requiring the respondent to

make payment of the entire outstanding amount along with interest @

15% per annum, which was the agreed rate of interest between the

parties, after granting adjustment of the amount already paid by the

respondent.

6. The appellant relies upon the decision of the Hon'ble Supreme

Court in Mrs. Saradamani Kandappan Vs. Mrs. S. Rajalakshmi &

Others, AIR 2011 SC 3234, wherein the Hon'ble Supreme Court has

taken a view contrary to the earlier held view that, generally, time is

not of the essence of an agreement to sell or purchase immovable

property. The Hon'ble Supreme Court in Saradamani Kandappan

(supra) has held that keeping in view the rapid increase in prices of

immovable property in the present time, the earlier held view that time

is, generally, not of the essence of an agreement to sell, cannot be

accepted. On this basis it is argued by learned senior counsel for the

appellant that the award proceeds on a wrong legal premise as

declared by the Hon'ble Supreme Court and, therefore, the same is

opposed to the public policy and liable to be set aside.

7. We have heard learned senior counsel for the appellant, perused

the award and the impugned order as well as perused the judgment of

the Hon'ble Supreme Court in Saradamani Kandappan (supra). The

award primarily is founded upon the act and conduct of the appellant

in itself granting time to the respondent to make payment of the

outstanding amounts along with interest @ 15% per annum. The said

communication dated 21.04.2006 issued by the appellant to the

respondent is pertinent and the relevant extract thereof reads as

follows:

"Subject: Installment Due for Flat No. 102, TOWER NO.3, ORCHID PETALS, SECTOR-49, SOHNA ROAD, GURGAON, Haryana.

Dear Sir/Madam,

This has reference to your booking of the above mentioned Flat the following amount is due as per our record.

       Installment              Due Date                        Amount

       Outstanding as on date   (to   be     calculated  on   670950.00
                                receipt of installment due)

       CASTING OF FOURTH 08-May-2006                          223650.00
       FLOOR ROOF SLAB

                                Amount Payable                894600.00

You are requested to kindly clear the dues of Rs.894600.00 (Rupees Eight Lakh Ninety Four Thousand Six Hundred Only) in favour of "VIPUL ORCHID PETALS SALES A/C" Payable at New Delhi, As per due date.

An interest of 15% shall be payable on all delayed payments. However, if the allottee(s) fails to pay interest on delayed payment the same shall be charged by the company either at the time of delivery of possession or at the time of transfer of aforesaid, which ever is earlier.

Thanking You & assuring you of our best service.

For Orchid Infrastructure Developers Pvt. Ltd"

8. The aforesaid communication shows beyond doubt that the

appellant itself granted time to the respondent to make payment of

the outstanding amount by 08.05.2006. The appellant also stated that

interest @ 15% per annum shall be payable on all belated payments,

meaning thereby that the appellant is agreeable to accepting belated

payments along with interest @ 15% per annum. It also notes that if

the allottee fails to pay interest on belated payment, the same shall be

charged by the appellant either at the time of delivery of possession or

at the time of transfer of unit, whichever is earlier. Therefore, non-

payment of interest on belated payments itself was also not reserved

as a ground to terminate the agreement. Pertinently, there is nothing

in this letter to show that the appellant ever put the respondent to

notice that the agreement may be terminated in case of non-payment

of the outstanding amount.

9. The appellant has itself disclosed the various occasions on which

time was extended by it from time to time to enable the respondent to

make payment. The learned Arbitrator on the basis of the aforesaid

conduct of the appellant concluded that it could not be said that time

was of the essence of the agreement. The said finding has been

arrived at by learned Arbitrator by appreciation of the facts and

evidence before him. It is not for the Court, while dealing with the

objections under Section 34 of the Act, to interfere with the factual

findings based on the evidence led before the Arbitral Tribunal,

particularly when it cannot be said that the said finding is not

supported by any evidence.

10. The decision in Saradamani Kandappan (supra), in our view, is

of no avail in the facts of this case since the conduct of the parties

shows that neither of them considered time to be of the essence of the

contract. The Hon'ble Supreme Court in Saradamani Kandappan

(supra) has not held that in all contracts relating to sale & purchase of

immovable property, necessarily, time is always of the essence. The

said aspect would have to be determined upon examination of, inter

alia, the conduct of the parties and upon examination of the manner in

which the parties have understood and worked out their contract.

11. For the aforesaid reasons, we find no merit in this appeal and

dismiss the same, leaving the parties to bear their own costs.

VIPIN SANGHI, J

SANJAY KISHAN KAUL, J

JULY 24, 2012 'BSR'