Delhi High Court

Karamyogi Shelters Pvt Ltd vs Benarsi Krishna Committee & Ors on 25 September, 2014

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                           Date of hearing and order: 25th September 2014.

+      FAO(OS) 256/2014
       KARAMYOGI SHELTERS PVT LTD              ..... Appellant
                   Through  Ms. Nitya Ramakrishnan & Mr.
                            Aswath Sitaraman, Advocates

                          versus

       BENARSI KRISHNA COMMITTEE & ORS        ..... Respondents
                    Through Mr. T.K. Gunju, Sr.Advocate with
                            Mr. Rohit Gandhi & Mr. Varun Garg,
                            Advocates

       CORAM:
       HON'BLE MR. JUSTICE KAILASH GAMBHIR
       HON'BLE MR. JUSTICE NAJMI WAZIRI
                    ORDER

       %            25.09.2014

KAILASH GAMBHIR, J. (ORAL)

1. In the instant appeal filed under Section 37 (1) (b) of the Arbitration

and Conciliation Act, 1996 read with Section 10(1) of the Delhi High Court

Rules, the appellant seeks to challenge the impugned judgment dated

03.02.2014 passed by the learned Single Judge, whereby the petition filed by

the appellant under Section 34 of the Arbitration and Conciliation Act, 1996

was dismissed.

2. Ms. Nitya Ramakrishnan, the learned counsel appearing for the

appellant vehemently contended that the learned Single Judge failed to

appreciate that the alleged letters of termination dated 10.10.1992 and

26.10.1992 were signed by one of the Attorneys, who alone was not

competent to rescind the Collaboration Agreement, because of the fact that

as per the terms of the Power of Attorney, only both the attorneys could take

a joint decision to rescind the agreement.

3. The other contention raised by the learned counsel for the appellant is

that the learned Single Judge also misconstrued the terms of the

Collaboration Agreement dated 16.11.1990 as amended on 02.05.1991

whereunder the payment of amount of Rs.240 lacs was to be made by the

appellant within a period of 90 days of handing over the possession of the

cinema house to the appellant. The possession of the cinema house in

question was never delivered by the respondent to the appellant. Therefore,

the appellant was not obligated to make the said payment of Rs.240 lacs to

the respondent.

4. Another contention raised by the learned counsel for the appellant is

that the reciprocal obligations arising under the Collaboration Agreement

could be performed by the appellant only after the plans were duly approved

by the MCD, that at the time of the execution of the Collaboration

Agreement, the Zonal Plan did not explicitly permit the development and/or

conversion of the cinema house into a commercial complex, therefore, any

demand for the said amount of Rs.240 lacs could be raised by the respondent

only after the approval of the Zonal Plan, which itself at that time was then

in a state of flux. The learned counsel further submits that the learned

Arbitrator and the learned Single Judge failed to appreciate that as per the

terms of Clause (xvii) of the Collaboration Agreement, once the possession

was taken over by the appellant, the appellant was obliged to make payment

@ Rs.35,000/- per month to the respondent during the first 27 months of the

development of the commercial complex, an amount which was subject to

further rise in terms of the said clause. Thus the appellant would not have

incurred the said liability after having paid the amount of Rs.240 lacs, that

too without being given the possession of the cinema house of the

respondent and also, the building by-laws being still in a state of flux.

5. We have heard the learned counsel for the appellant and given our

thoughtful consideration to the arguments advanced by her.

6. The petitioner /appellant is in appeal to assail the judgment dated

03.02.2014 passed by the Hon'ble Single Judge, wherein the petition filed

under Section 34 of the Arbitration and Conciliation Act, 1996 was

dismissed along with costs of Rs. 25,000/-. The learned counsel for the

appellant reiterates the contentions raised before the learned Single Judge.

The learned Single Judge in the impugned judgment held that the objections

raised by the appellant herein lacked any legal or factual merit.

7. As can be observed, a detailed award was passed by the learned

Arbitrator based on the evidence led by the parties and on careful

examination of the terms of the Collaboration Agreement dated 16.11.1990

which stood amended on 02.05.1991 and other materials placed on record in

the form of documentary evidence. Though the learned Single Judge did not

find any illegality, infirmity or perversity in the award dated 12.05.2004

passed by the learned Arbitrator, the impugned order delved deeply into

each and every issue and after a detailed discussion the judgment was in

agreement with the reasoning given by the learned Arbitrator.

8. It is a settled legal position that the Court is precluded from re-

appraising the evidence and the findings recorded by the learned Arbitrator

and substitute its own view in preference to the view taken by the learned

Arbitrator. The scope of interference by the Court in interpreting the terms

of the contract is limited and the consistent judicial view has been that when

a view taken by the learned Arbitrator is a plausible one, then even if there is

latitude for another view or interpretation the Court would refrain and desist

from interfering. It is only when the Court is satisfied that the reasons given

by the learned Arbitrator are totally perverse or illegal, that the Court would

exercise its jurisdiction to interfere with such an award. We may usefully

refer to a recent Supreme Court judgment in Civil Appeal No. 9048 of 2014

titled as Swan Gold Mining Ltd. V. Hindustan Copper Ltd., where, in the

following para, it was held as under:-

"Section 34 of the Arbitration and Conciliation Act, 1996 corresponds to Section 30 of the Arbitration Act, 1940 making a provision for setting aside the arbitral award. In terms of Sub-section (2) of Section 34 of the Act, an arbitral award may be set aside only if one of the conditions specified therein is satisfied. The Arbitrator's decision is generally considered binding between the parties and therefore, the power of the Court to set aside the award would be exercised only in cases where the Court finds that the arbitral award is on the fact of it erroneous or patently illegal or in contravention of the provisions of the Act. It is a well settled proposition that the Court shall not ordinarily substitute its interpretation for that of the Arbitrator. Similarly, when the parties have arrived at a concluded contract and acted on the basis of those terms and conditions of the contract then substituting new terms in the contract by the Arbitrator or by the Court would be erroneous or illegal."

"It is equally well settled that the Arbitrator appointed by the parties is the final judge of the facts. The finding of facts recorded by him cannot be interfered with on the ground that the terms of the contract were not correctly interpreted by him."

9. This Court shall not reiterate the reasons given by the learned Single

Judge in dealing with all the said contentions raised by the learned counsel

for the appellant, as such an exercise would merely be repetitive in nature.

We find ourselves in complete agreement with the reasoning given by the

learned Single Judge in dismissing the petition filed by the appellant under

Section 34 of the Arbitration and Conciliation Act, 1996 while upholding

the award dated 12.05.2004 passed by the learned Arbitrator.

10. The learned Single Judge is correct in observing that Clause (xviii) (d)

after the amendment, clearly provided that the amount of Rs.240 lacs had to

be paid on demand for taking possession of the cinema house, by the party

of the first part from the tenant and in this background the contention of the

appellant that the amount of Rs.240 lacs were payable by the appellant to the