Madhu Agarwal vs Fastcon Infrastructure Pvt Ltd
2013 Latest Caselaw 1486 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                          Order delivered on: April 02, 2013

+                            OMP.No.319/2013

      MADHU AGARWAL                                          .....Petitioner
                                 Through       Mr.Md.Niyazuddin Adv.

                    versus

       FASTCON INFRASTRUCTURE PVT LTD                           .....Respondent
                        Through None

       CORAM:
       HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. (Oral)

1. The abovementioned petition has been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as „the Act‟) for partly setting aside the award dated 2nd February, 2013 passed by the learned Arbitral tribunal to the extent of non- consideration (rejection) of the counter-claim of `25 lac of the petitioner.

2. Brief facts of the petition are that the petitioner and the respondent entered into an agreement to sell dated 21st January, 2012 for the sale of property situated at 290, Kohat Enclave, New Delhi-110034 with a built up area of 4512 sq.ft. (approx.) for a sale consideration of `20,00,00,000/- (Rupees Twenty Crores) and respondent paid `2,50,00,000/- to her as earnest money at the time of execution of the agreement to sell and further promised to pay the first installment of `5,00,00,000/- on or before 5th February, 2012, the second installment of `5,00,00,000/- on or before 20th February, 2012 and the final installment of ` 7,50,00,000/- on or before

6th March, 2012 in order to get the sale deed executed, related formalities completed.

3. The petitioner‟s case is that thereafter nothing was heard from the respondent after the said agreement to sell was entered into so he wrote to the respondent on 5th February, 2012 reminding it about the schedule of the first installment to which the respondent replied through its letter dated 9th February, 2012 expressing its regret, inability to make the part payment by 5th February, 2012, requesting for an extension of 10 days and promising to make payment of `10 crores i.e. the 1st, 2nd part payment of the entire sale consideration altogether by 20th February, 2012.

4. As the respondent again failed to honour its aforementioned commitment so the petitioner was constrained to write a letter dated 22nd February, 2012 to the respondent seeking payment of the first two parts of the sale consideration immediately to which the respondent never replied. The petitioner again wrote a letter dated 9th March, 2012 to the respondent reminding about the last date for the full & final payment of the sale consideration, seeking the same immediately to which the respondent replied vide letter dated 13th March, 2012 seeking another extension of four months and promising to make the full payment latest by 10th July, 2012 along with an additional amount of `25,00,000/- to get the sale deed executed.

5. In view of the said agreement, the petitioner refused many buyers with lucrative offers because she had committed to the respondent but since the respondent repeatedly failed to honour its commitments she was constrained to terminate the agreement to sell by her letter dated 17th July, 2012 and thereby forfeit the earnest money paid by the respondent as per Clause 9 & 8 of the said agreement.

6. Subsequent to the termination and forfeiture of the earnest money the respondent moved a claim petition before the Arbitral Tribunal of Sh.Ashok Kumar Singh (Advocate) for the refund of `2,50,00,000/- paid to her as earnest money.

7. The petitioner filed her written submission cum Counter-Claim of `25 lac which the respondent had undertaken to pay in lieu of the extension of four months vide its letter dated 13th March, 2012. By award dated 2nd February, 2013 the claim of the petitioner in this regard was rejected for lack of evidence.

8. The petitioner has challenged the said findings arrived by the Arbitrator in his award by filing the written submission-cum-counter claim.

9. It is stated by the petitioner that though learned Arbitrator rightly took note of the respondent‟s letter dated 13th March, 2012 for the purpose of termination of the said agreement but failed to appreciate that the respondent agreed to pay an additional amount of `25 lac, in case the extension of four months was granted to the respondent. It is wrongly held by him that the letter dated 13th March, 2012 of the respondent stipulates that the offer to pay an additional amount of `25 lac to the objector was a conditional offer subject to the petitioner incurring any „Damages‟ due to the extension so granted if at all it (the extension as well as offer of the respondent) was accepted and it was incorrectly held that the petitioner did not intimate the respondent of her acceptance of the offer hence the offer to pay additional `25 lac for the extension of 4 months was never accepted by the petitioner and the termination was done in its natural course, not after considering/ accepting the request of the respondent. Thus, to this extent, the impugned award is illegal, opposed to the public policy of India, against the principles of natural justice, morality, fair play, contrary to law of India and is liable to

be set aside.

10. The scope of Section 34 of the Act is limited to the stipulations contained in Section 34(2) of the Act. The jurisdiction of the Court to interfere with an Award of the Arbitrator is always statutory. Section 34 is of mandatory nature, and an Award can be set aside only on the Court finding the existence of the grounds enumerated therein and in no other way. The words in Section 34(2) that "An Arbitral Award may be set aside by the Court only if" are imperative and take away the jurisdiction of the Court to set aside an Award on any ground other than those specified in the Section. The Court is not expected to sit in appeal over the findings of the Arbitral Tribunal or to re-appreciate evidence as an Appellate Court. A recent observation of the Supreme Court in the case of P.R.Shah, Shares and Stock Brokers Private Limited vs. B.H.H. Securities Private Limited and Others, (2012) 1 SCC 594 is apposite in this regard and the relevant portion, contained in paragraph 21 of the said judgment is, reproduced as under:-

"21. A Court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or re-appreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. Therefore, in the absence of any ground under section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at."

11. The petitioner has badly challenged the arbitral award in the grounds as set out in the petition and there is not even a whisper in the said grounds to make them fall under the limited and narrow mandate of Section 34 of the Act. Even if the additional grounds under Section 34, as laid down by the Supreme Court in the case of ONGC vs. Saw Pipes Ltd., AIR 2003 SC 2629 are considered, which are patent illegality arising from statutory provisions

or contract provisions or that the Award shocks the conscience of the Court, no such facts are narrated in the petition. The endeavour of the petitioner is thus to convert the challenge of the arbitral award into an appellate proceeding involving a total re-hearing of the matter and re-appreciation of evidence, and which endeavour as per the consistent dicta of the Hon‟ble Supreme Court is impermissible in law.

12. The Arbitral Tribunal is the final arbiter of the disputes between the parties. The Supreme Court has expounded on the principle as to the sanctity of the decision of the arbitrator in the case of Markfed Vanaspati and Allied Industries vs. Union of India, (2007) 7 SCC 679, where in paragraph 17 of the said judgment, it was observed as under:-

"17. Arbitration is a mechanism or a method or resolution of disputes that unlike court takes place in private, pursuant to agreement between the parties. The parties agree to be bound by the decision rendered by a chosen arbitrator after giving hearing. The endeavour of the court should be to honour and support the award as far as possible."

13. It is settled law that the Award is not open to challenge on the ground that the Arbitral Tribunal has reached a wrong conclusion or that the interpretation given by the Arbitral Tribunal to the provisions of the contract is not correct. The entire objections of the petitioner, as contained in the grounds, are an attempt to point out imaginary errors in the findings of the Arbitral Tribunal which approach is totally alien to Section 34 of the Act. There is no averment in the petition as to the existence of any shocking or patent illegality which is apparent on the face of the arbitral award. It is a trite proposition that finality is attached with the decision of the Arbitral Tribunal which is the final judge of both the questions of fact and law referred to it. The petitioner has no such case that the Arbitral Tribunal has

no jurisdiction to adjudicate the disputes referred to the Arbitral Tribunal. When the petitioner has no such contention that the Arbitral Tribunal has no jurisdiction to decide the claim, the merit of the decision of the Arbitral Tribunal cannot be challenged by a party to the contract merely because the interpretation given by the Arbitral Tribunal to the contract terms is not to its liking. In this regard, the Supreme Court has held in the case of Maharashtra State Electricity Board vs. Sterilite Industries (India) and Anr., (2001) 8 SCC 482, in paragraph 9 of the said judgment, as under:-

"9. ......the arbitrator‟s award both on facts and law is final; and there is no appeal from this verdict; that the court cannot review his award and correct any mistake in his adjudication, unless the objection to the legality of the award is apparent on the face of it."

14. The learned Arbitrator while rejecting the claim of the petitioner has given the following reasons:

"It was also pleaded by the counsel for the respondent that the claimant had offered to pay the damages to the respondent to the tune of Rs.25,00,000/- in lieu of the extension of time given to the claimant by the respondent. However the respondent never communicated the claimant about her acceptance to the request of extension of another 4 months.

Though the termination letter is after the expiry of the said extension i.e. 10.07.2012 however the acceptance of the said extension was never communicated to the claimant by the respondent. In the present circumstances it can only justify the termination of the Agreement to Sell dated 21.01.2012 and the forfeiture of the earnest money but, the counter claim of Rs.25,00,000/- (Twenty Five Lac) of the respondent holds no ground in the absence of any such communication/acceptance.

Moreover, the letter dated 13.03.2012 of the claimant had categorically suggested that the said amount of

Rs.25,00,000/- shall be paid if the respondent suffered any damages. There is not even a whisper about damages so suffered by the respondent in her written statement cum counter claim is given. No documents were tendered evidencing such damages.

Moreover, the claimant has already suffered a loss of Rs.2.5 crores due to financial hardship, and the respondent has already forfeited a substantial amount of the claimant and seeking an additional amount of Rs.25,00,000 (Rupees Twenty Five Lac) from the already ailing claimant, will not be just and equitable. Hence the counter claim of the respondent is rejected."

15. After having gone through the reason given by the learned Arbitrator, it appears that he has taken a plausible view in the matter which seems to be quite reasonable which cannot be interfered with. It is also the admitted position that the petitioner has already forfeited the earnest money for a sum of `2,50,00,000/- which was paid by the respondent to the petitioner at the time of execution of agreement.

16. Therefore, considering the overall facts and circumstances and in the light of the finding arrived by the Arbitrator, there is no merit in the objections, the same are dismissed.

(MANMOHAN SINGH) JUDGE APRIL 02, 2013