M/S. Devika Builders Pvt. Ltd. vs National Cooperative Consumers ...
2015 Latest Caselaw 3748 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI
                                      Judgment reserved on May 01, 2015
                                     Judgment delivered on May 08, 2015
+                         O.M.P. 215/2010

M/S. DEVIKA BUILDERS PVT. LTD.          ..... Petitioner
                  Through: Mr.Anil Kr.Aggawal, Adv.

                          versus

NATIONAL COOPERATIVE CONSUMERS AND ANR.
                                   ..... Respondents
                Through: Ms.Anju Bhattacharya, Adv.

+                         O.M.P. 268/2010

NATIONAL COOPERATIVE CONSUMER FEDERATION OF
INDIA LTD.                          ..... Petitioner
                Through: Ms.Anju Bhattacharya, Adv.

                          versus

M/S. DEVIKA BUILDERS PVT. LTD. ANR ANR. ....Respondents
                  Through: Mr.Anil Kr.Aggawal, Adv.

CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.

1. The challenge in these two petitions is to an award dated January

22, 2010 of the learned Sole Arbitrator, whereby, the learned Sole

Arbitrator has allowed some claims/counter claims of the petitioners

herein and rejected the rest. The challenge by the petitioner in OMP

215/2010 is to the extent, claims were rejected. Similarly, the challenge

by the petitioner in OMP 268/2010 is to the extent, the claim No. 41(ii)

and 41(iii) of the respondent in the petition namely M/s. Devika Builders

Pvt. Ltd. were allowed under issue No. 4 w.e.f. June, 2006 and the

counter claim No. 9(A) towards rent and 9(B) expenses towards security,

of the petitioner in this OMP were rejected. For the purpose of

convenience, the parties shall be referred to as per their status in OMP

215/2010 i.e. M/s. Devika Builders Pvt. Ltd. shall be referred as the

petitioner and National Cooperative Consumers Federation of India Ltd.

as respondent.

The facts:

2. The Delhi Development Authority allotted plot No. B-19, Okhla

Industrial Area, Phase I, New Delhi during 1976-77, admeasuring

5634.38 sq. yds. to the respondent at a cost of Rs. 3.15 lakhs. The

possession of the plot was taken on March 23, 1976. The respondent

executed a Perpetual Lease Deed on April 10, 1985. An agreement of

collaboration dated October 14, 1996 was executed between the

petitioner and the respondent herein for construction on the said plot. It

was the case of the petitioner before the learned Arbitrator that as per the

terms and conditions of collaboration agreement, the petitioner was to

make construction through its own finances and was entitled to half

portion of the said property i.e. 50% of the land and 50% of the building

thereon. It was the case of the petitioner that it got the plans approved

from the competent authority. It had placed in possession about 30,000

sq. fts. of the roof structure within a period of four and a half months and

before March 22, 1997, the date on which, DDA granted extension of the

terms of lease deed of the said plot. It was the case of the petitioner that

the construction of the building was to be carried out within a period of

two years. According to the petitioner, the terms of the DDA lease are

extendable to a maximum period of 20 years. The said 20 years lapsed on

March 20, 1997. It was stated that on March 23, 1997 which was called

as a first phase, the construction stopped, which was much before the

date of October 14, 1998, the last date of two years for completion of the

construction agreed between the parties. It was the respondent's liability

to obtain extension of time from DDA before March 21, 1997 for the

entire period of construction. Besides, investing the money, the petitioner

was to apply and obtain C & D certificate after phase I of the

construction and apply for completion certificate after building is

completed in all respect.

3. The petitioner's case is, the respondent failed to obtain further

extension of time for construction of building. In the absence thereof, the

petitioner could not carry out further construction and on the default of

the respondent, the petitioner was prevented from completing the

construction on or before October 14, 1998 as per the agreed schedule

and the petitioner's plant, machinery, labour and supervisory staff

employed at the site remained idle for a long period, incurring heavy

expenditure and losses. However, to overcome the logjam and delay,

being detrimental to the petitioner's own interest, who had heavily

invested on partial construction of the building, obtained the loan from

the Bombay Cooperative Mercantile Bank @ 18% interest compounded

quarterly and recommenced the construction work. It was its case that the

building was completed in all respect before June, 2000. On June 22,

2000, the petitioner in due discharge of its contractual obligation also

filed for completion certificate under the signatures of respondent with

the MCD. According to the petitioner, in terms of Section 346 of the

Delhi Municipal Corporation Act, 1957, there is a provision for deemed

completion of building. The notice in this respect was communicated to

the MCD by the petitioner on June 22, 2000 but the same remained

ineffective since the respondent had failed to obtain the extension of time

from DDA and for want of extension of time from the DDA the

requirement of completion certificate also remained unfulfilled. The

same was required for obtaining permission for sewerage and water

connection from the DJB and for conversion of property from leasehold

to freehold from the DDA.

4. It was also the case of the petitioner that the respondent forcibly

took possession of the entire building on June 30, 2000 and

mischievously hindered the completion of remaining minor work of

finishing and installation costing about Rs. 38 lakhs. It is also stated that

even though the building was completed in June 2000, the respondent

wrote to the DDA after delay of more than 3 years on April 21, 2002 and

December 5, 2003, requesting for post facto extension of time for

completion of building upto June 30, 2000. It was only on April 25,

2005, nearly 5 years after the building was completed in all respect in

June, 2000, the respondent could obtain the extension of time from the

DDA, that was required for obtaining completion certificate from the

MCD. Thereafter on April 4, 2006, the MCD granted permission for

obtaining water and sewerage connection. It was also stated that the

respondent applied for conversion from leasehold to freehold on

December 13, 2004, and the petitioner also took initiative in this regard

and DDA allowed conversion on June 13, 2006.

5. After dispute arose between the parties, the petitioner invoked the

arbitration clause and made the following claims before the learned

Arbitrator:-

"CLAIM STATEMENT -

41(i) on Rs.25 lacs, paid by DBPL to

NCCF as advance on 14.10.1996, for a period of 9 years 9 months from 14.10.1996 to June, 2006 Rs.95,94,435.00

41(ii) Interest @ 16.5% compounded quarterly, On the cost of construction in Ph1, amounting To Rs.1,23,28,000.00 for a period of 9 years and 3 months, from 14.10.1996 to 20.03.1997 Rs.4,26,80,292.00

41(iii) Interest @ 16.5% on the cost of Construction In Ph-II, amounting to Rs.3,23,56,983.00 for a Period of 6 Years, from June 2000 to June 2006 Rs.5,30,09481.00

41(iv) Ground Rent and House Tax, being Demanded by NCCF to be borne by NCCF

41(v) Free Hold Charges being demanded from DBPL by NCCF be borne by NCCF alone

41(vi) Value of short fall in Land, measuring 209.01 sq mts @ Rs.26,080.00 per sq. Mts based on the Freehold Charges as declared by DDA for conversion of Lease Hold Rights to freehold rights Rs.54,50,981.00

41(vii) The land rates as in para vi are old, DDA has yet to declare the rates as as to dat. Search is being made in the office of the Sub Registrar South Delhi/DDA for the market price of such Industrial plots in Okhla Industrial Area as will as in the Mohan Cooperative Area after that the claim for short fall in land can be Modified.

Talks works out to Rs.11,07,35,189.00 say Rs.11,07,35,000/- Prayer Clause

b) To direct respondent to register the sale deed with the Sub-Registrar South Delhi with respect to 15% share of the claimant in the property no.B-19 Okhla Industrial Area-1, New Delhi - 110020.

c) Such other or further relief.

d) Cost of Arbitration proceedings."

6. The case of the respondent was that as per the agreement of

collaboration dated October 14, 1996 i.e. clause XIII(2)(c), the building

should have been completed within 2 years from the date of the

agreement i.e. October 14, 1998. The petitioner failed to complete the

building in time and the respondent imposed a penalty of Rs. 5 lakhs as

per clause XII of the agreement of collaboration. That in order to settle

the dispute of allocation of portion between the parties, the agreement of

apportionment was executed on April 24, 2001 as per which, the

petitioner was assigned eastern side and the respondent would retain and

occupy the western portion. That in order to further clarify the points of

dispute, further conditions of agreement to collaboration were executed

between the parties on April 21, 2001

7. The respondent would also submit that a payment of Rs 5 lakhs

vide cheque dated January 11, 2002 of Bombay Mercantile Cooperative

Bank Ltd., Daryaganj was given to it towards penalty for delay and the

cheque got dishonoured when presented. The petitioner issued another

post dated cheque of March 31, 2002 in lieu of the dishonoured cheque.

The said cheque also returned back with the remarks "insufficient funds".

According to the respondent, on the request of the petitioner, it granted

two loans of Rs. 38 lakhs and Rs. 37 lakhs respectively for completion of

remaining items of work and for making 50% payment on behalf of the

petitioner for making the property free hold, to the DDA. Two

agreements dated November 25, 2004 and March 17, 2005 were executed

between them in that regard. As per clause III of the agreement, the

petitioner handed over post dated cheques of Rs. 38 lakhs and Rs. 37

lakhs respectively for the amounts due and payable. The said cheques

got dishonoured. According to the respondent, on the request of the

petitioner, the respondent also paid property tax to the MCD for the years

2002-2006, the 50% share of the petitioner amounting to Rs.15,74,793.50

paisa. It was the case of the respondent that it cooperated with the

petitioner at every stage and made payment on their behalf for ground

rent, property tax, free hold charges besides two loans of Rs.38 lakhs and

Rs. 37 lakhs as mentioned above. According to the respondent, the

petitioner has not made any payment to the MCD, DDA and any

government agencies. It was also the case, as per books of account, an

amount of Rs. 1.26 Crores was due from the petitioner. The respondent

would submit that they are ready to execute and register the sale deed for

the eastern side of the portion of the property, provided the petitioner

clears the abovementioned dues. To sum up, it was its case that the

project should have been completed on October 14, 1998 whereas the

same was completed by the petitioner in July 2006 when water,

sewerage, electricity connection, fire fighting approval were restored by

the petitioner from the concerned authorities. In the absence of such

facilities, it was not possible to occupy the building. According to the

petitioner, it had lost sizeable revenue by way of rent for basement and

ground floor in its western portion due to delay in construction on the

part of the petitioner. According to them, the rent for the year 1998-99 as

gathered from the property dealers was Rs. 12 per sq. ft. for basement

and for Rs. 15 per sq. ft. for the ground floor. It was also stated that it

incurred heavy expenses for the security arrangement for entire building

from June, 2000 onwards. The respondent was forced to intensify the

security of the building due to threats from the petitioner. The

respondent filed the following counterclaims:

"9. (A) RENT

Rent for the Basement measuring 11353 sq. ft. @ Rs.12/- per sq. ft.

per month and rent for the Ground floor measuring 11528 sq. ft. @ Rs.15/- per sq. ft. per month for the period from 14.10.1998 to 30.04.2007 with escalation in rent @ 15% after every three years Rs.3,73,98,817.00

Add interest @ 16.5 compounded quarterly for the period from 14.10.98 to 30.4.07 Rs.3,60,06,703.00

Total: Rs.7,34,05,520.00

9.(B) EXPENSES TOWARDS SECURITY

Payment to the Security Agency for the Period from 1.6.2000 to 31.3.07 Rs.10,48,519.00

Add interest @ 16.5 compounded quarterly on the security expenses paid by the Respondent for the period from 1.6.2000 to 31.03.07 Rs.7,75,055.00

Total: Rs.18,23,574.00

9.(C)OUTSTANDING AMOUNT RECOVERABLE FROM M/S. DEVIKA BUILDERS PVT. LTD. UPT 31.3.2007

Particulars Amount recoverable

Property tax paid to MCD on behalf Of DBPL Rs.15,74,793.50

Amount paid to DDA on behalf of M/s.

                DBPL towards free hold of property
                Including stamp duty                      Rs.39,81,286.00

                Amount paid towards ground rent to
                DDA                                       Rs.64,622.00

                Loan/advance given to M/s. DBPL for
                Completion of remaining item of works     Rs.38,00,000.00

                Expenses and back charges towards
                dishonour of cheques of M/s. DBPL         Rs.3,190.00

                Interest debited to M/s. DBPL account
                as on [email protected] 12% per annum.           Rs.26,58,853.00

                Others                                    Rs.4,96,746.00

                         Total:                           Rs.1,25,79,490.00

                Grand Total (A+B+C)= Rs.7,34,05,520.00
                + 18,23,574.00 + 1,25,79,490.00        Rs.8,78,08,584.00"

8. It is noted that during the arbitration proceedings, the respondent

filed an application seeking permission of the Arbitrator to file

supplementary defence statement/additional affidavit in order to bring out

the factum of the petitioner having taken over the possession of the

eastern side of the building in June 2006. It was also stated in the said

application that in the year 2006 itself, the possession was transferred by

the petitioner to one International Refrigeration Corporation, a sole

proprietary concern of one Mr. Kedar Nath Babbar and definitely for

valuable consideration. It was also stated that respondent also rented out

basement/western portion of the said building in 2007 to Mr. Babbar at a

rent of Rs. 2.27 lakhs per month approx. and therefore, the petitioner

must be getting more than Rs. 5 lakhs for the entire building which being

occupied and used by Mr. Babbar. In other words, it was the case of the

respondent, there is no issue of the petitioner claiming any compensation,

damages on the plea that it could not utilize the building even after June

2006.

9. The learned Arbitrator has rejected and allowed the claim No.

41(ii) and 41(iii) granting interest @ 12% w.e.f. June 2006 on the 50%

investment made by the petitioner excluding Rs.25,00,000/- non

refundable deposit and counterclaims:

Claim No.               Allowed & Rejected   If allowed, in what manner

41 (i)                  Rejected
41 (ii) & (iii)         Allowed              Allowed in favour of the petitioner, whereby

the learned Arbitrator granted interest limited to 12% pa in terms of the loan agreement dated November 25, 2004 and the said interest was to paid limited to 50% of the invested amount (excluding non refundable deposit of Rs.25

lakhs) which is the share of the petitioner in the subject property. The interest was directed to be paid from June 2006 till the date of actual payment by the respondent to the petitioner.

41 (iv)                 Rejected
41(v)                   Rejected
41(vi)                  Rejected
41(vii)                 Rejected

10. On the issue whether the respondent is bound to execute and

register a sale deed as agreed with respect to 50% of the property is

concerned, the same was allowed in favour of the petitioner, whereby

direction was given to execute and register the sale deed within a period

of three months from the date of the award. The said direction was

subject to the counter claim of the respondent as decided by the learned

Arbitrator.

11. Insofar as the counterclaims of the respondent are concerned, the

counterclaim No. 9(A) was rejected. Similarly, the counterclaim No.

9(B) was also rejected.

12. The counterclaim No. 9(C) which have Sub-claims from (i) to

(vii), the learned Arbitrator except (viii) had allowed the rest inasmuch as

the learned Arbitrator has allowed and granted in favour of the

respondent, the following amounts:

1. An amount of Rs. 15,74,793/- [claim No. 9C(i)] paid to the MCD by the respondent against property tax.

2. An amount of Rs. 39,81,286/- paid to the DDA by the

respondent on behalf of the petitioner.

3. An amount of Rs.64,622, paid by the respondent to the DDA as ground rent.

4. An amount of Rs. 38 lakhs for the loan granted by the respondent to the petitioner.

5. An amount of Rs. 3190/- as the expenses and bank charges incurred by the respondent towards dishonour of cheques of the petitioner.

6. Interest @ 12% on the two loans granted by the respondent. The Arbitrator granted 12% interest on Rs.15,74,393.50 paisa.

7. Counterclaim was not granted.

13. The learned Arbitrator has also granted interest of 12% on

Rs.2,81,286/- and on Rs.64,622. In other words, the learned Arbitrator

has granted interest @ 12% for counter claim Nos. 9(C)(i) to 9(C)(vi)

w.e.f. March 31, 2007 till the date of payment. The learned Arbitrator

directed the petitioner to pay the counterclaims amount within a period of

three months from the date of the award. On receiving the counterclaims'

amount from the petitioner, it was directed, the respondent should make

the registration of the petitioner's share of property at B-19, Okhla

Industrial Area, Phase I, New Delhi with the Registrar within a period of

three months from the date of receiving the amount from the petitioner.

14. The contention of Mr.Anil Kr. Aggarwal, learned counsel for the

petitioner is primarily that the learned Arbitrator has failed to consider

that the delay was attributable to the respondent on its failure to obtain

extension of time for construction of the building inasmuch as the

respondent could get the extension of time in the year 2005 w.e.f. June

2000. It was his submission that in the absence of extension of time, the

completion certificate was not issued by the MCD. In the absence of

completion certificate, conversion of property from leasehold to freehold

also got held up. Without conversion of property from leasehold to

freehold, the property could not be partitioned resulting in non execution

of the sale deed of the portion falling to the share of the petitioner. It was

also his submission that the respondent took forcible possession of the

entire building and mischievously hindered the completion of remaining

work of Rs. 38 lakhs. The learned counsel for the petitioner concedes

that finally on January 24, 2001, the respondent agreed for apportionment

in accordance with the agreement.

15. He would also submit that there was a fundamental breach of the

agreement inasmuch as the respondent wrongfully promising to mortgage

entire property to it, including the petitioner's share, got a loan of Rs.

5.50 Crores sanctioned from National Cooperative Development

Corporation. He would also state, that despite apportionment, the

respondent allowed the petitioner to take possession and move to its

portion only on June 5, 2006. He has also stated that non execution of the

sale deed by the respondent in favour of the petitioner or its nominee was

a continuing breach.

16. Insofar as the findings of the learned Arbitrator are concerned, on

claim No. 41(i) which was a claim in the nature of damages by way of

interest on non-refundable deposit of Rs. 25 lakhs made to the respondent

is concerned, it was his submission that the learned Arbitrator has

wrongly rejected the claim of the petitioner for interest on non-refundable

deposit/licence fee when the delay was attributable to the respondent

resulting in undue benefit to the respondent. On claim No. 41(ii) & (iii),

it was his submission that the learned Arbitrator wrongly held that the

building was completed in the year 2006, which is contrary to the record

and incontrovertible admission of the respondent and wrongly did not

allow interest w.e.f. June, 2000 as claimed by the petitioner, who

otherwise is entitled to damages by way of interest on his investment

from day one when first brick was laid by him on commencement of

construction and at least from 14/10/1998, the stipulated date of

completion of building. In doing so, the learned Arbitrator ignored the

acts, omission, commissions and conduct and fundamental breaches of

agreement committed by the respondent, which not only resulted in delay

in construction but non-realization of the fruit of financial investments

and inputs made by the petitioner for a long period of more than 9 years

and is continuing till date. In doing so, the learned Arbitrator misdirected

himself in determining and fixing the date of completion of building for

deciding the claims of the petitioner, when in fact, the same was entirely

inconsequential. Further misinterpreting the clause 15 of the agreement

and ignoring the specific terms of clause 15 the Indemnity Bond and

Section 73 of the Indian Contract Act, whereby the petitioner is entitled

to claim damages on the investments made by the petitioner and the

benefits and profits therefrom blocked by the acts, omission, commission

and conduct and fundamental and criminal breach and violation of the

terms of agreement by the respondent, the learned Arbitrator wrongly

restricted the claim of damages/interest only to 50% of the investment

made by the petitioner. He would also submit that the learned Arbitrator,

while determining the rate of interest payable to the petitioner, omitted to

consider that the petitioner has claimed interest as damages suffered by it

on the investment made by it not as the interest along with some principal

amount payable by the respondent to the petitioner. According to him, it

could not be simple rate of interest based on the rate of interest against

soft loan extended by the respondent in its own interest. He would state

that the rate of interest must commensurate to loss and damages suffered

by the respondent as per actual market rate interest paid by the builder.

He would state, the learned Arbitrator has ignored the fact that the

petitioner has been deprived of the use of money due to the defaults and

acts and omissions and fundamental breaches by the respondent and need

to be compensated in terms of clause 15 of the agreement read with

Section 73 of the Indian Contract Act. He would state that both the

parties had claimed interest at 16.5% compounded quarterly in their

respective claim statements. He states, the learned Arbitrator also

ignored that on June 12, 2001, the respondent had demanded interest @

16.5 %, thus, there is an agreement between the parties to that effect and

extent. He would state, in view of this position, there was no discretion

on the part of the learned Arbitrator to award 12% simple interest. He

would rely upon "O.P.Malhotra on the Law and Practice of Arbitration

and Conciliation". He would also rely upon the judgments in the case of

Susaka Pvt. Ltd. Vs. Union of India and Ors., AIR 2005 Bombay 257,

Mohinder Pal Singh Vs. Northern Railway, (2007) 143 DLT 634,

Hyder Consulting (UK) Ltd. Vs. Governor, State of Orissa and Ors.,

2014 (13) SCALE 169, the Managing Director, J& K Handicrafts,

Jammu Vs. M/s. Goodluck Carpets, AIR 1990 SC 64. He would also

state, interest on interest under Section 31(7)(a) of the Arbitration and

Conciliation Act, 1996 (Act, in short) is permissible.

17. On claim No. 41(iv), learned counsel for the petitioner would state,

that the learned Arbitrator has omitted to consider that in terms of the

agreement during construction, the possession of the property remained

with the respondent and even thereafter till today, the respondent does

not recognise the possession of its portion by the petitioner and terms the

same as Trespass and alleged breach of the agreement. Therefore,

nothing is payable by the petitioner to the respondent against the claim of

ground rent and house tax which is a statutory liability of the owner or

the person in possession of the land. In the absence of a sale deed, the

liability of the property tax and ground rent cannot be on the petitioner.

18. On claim No. 41(vi) on the shortfall of land, the learned counsel

for the petitioner has during the course of the arguments not pressed it.

19. Similarly, learned counsel has also not pressed the

award/conclusion of the learned Arbitrator on claim No. 41(vii).

20. On claim No. 41(v) and the counter claim of the respondent, his

only submission was that the loans advanced by the respondent are not

recoverable in an arbitration proceedings. According to him, the loan

agreements creating charge on immovable property are in fact mortgage

deeds and being unregistered, are hit by Section 59 of the Transfer of

Property Act and are therefore, unenforceable and in terms of the

judgment of the Supreme Court in the case of Booz-Allen and Hamilton

Inc Vs. SBI, Home Finance Ltd. and Ors., AIR 2011 SC 2007, wherein

it has been held, the claims arising out of and based on mortgage deeds

are disputes in rem and cannot be decided in private forum such as

arbitration and are non-arbitrable under Section 34(2)(b) of the Act.

21. On the other hand, learned counsel for the respondent would, at the

outset, submit that the challenge to the award by the petitioner is totally

misconceived as this Court under Section 34 of the Act has a very limited

jurisdiction restricted to the grounds mentioned in Subsection 2 of

Section 34. She would further submit that the award of 12% interest

against claim No. 41(ii) and (iii) even for period post 2006 by the

Arbitrator is also, contrary to the terms of the agreement. According to

her, the learned Arbitrator overlooked the terms of the agreement. It is

her submission that the petitioner was to construct the plot at its own

cost. On account of the delay attributable to the petitioner, the respondent

had also suffered loss by way of rent which was disallowed by the

learned Arbitrator but claim Nos. 41(ii) & (iii) were allowed overlooking

the fact that the petitioner was in breach as he completed the construction

in 2006, whereas as per agreement, it should have been completed by

1998. She would also state that interest by way of damages cannot be

granted without the actual proof of loss. According to her, admittedly, the

respondent was in possession of its portion since 2006 and interest as

damages, post 2006 is untenable. The Arbitrator being a creature of

agreement must operate within the four corners of the agreement; he

cannot award any amount which is ruled out; the damages could only be

claimed u/s 73 of the Contract Act for which burden of proof was on the

petitioner to show that it had actually suffered damages or loss. She

would also state, the agreement between the parties provided for

execution of sale deed after dues were cleared. She would also state that

the reliance placed by the petitioner on the judgment of the Supreme

Court in Booz-Allen and Hamilton Inc (supra) is not applicable to the

facts of this case. According to her, no such plea was ever taken by the

petitioner before the learned Arbitrator. The plea is clearly an

afterthought which is even otherwise, untenable.

22. Having heard the learned counsel for the parties, at the outset, I

may state, that the challenge of the petitioner to the award is only to the

extent, certain claims of the petitioner were rejected. This is clear from

the averments made in para 1 to the petition. In other words, the

petitioner has not challenged the award of the Arbitrator on the

counterclaims granted in favour of the respondent. Be that as it may,

since the parties have argued on all the aspects of the award, I proceed to

consider as if the challenge to the award by the parties is to the rejection

of their respective claims and counterclaims and also the award of the

claim/counterclaims of the other party.

23. Before I proceed to deal with the submissions made by the learned

counsel for the parties, suffice to state as conceded by the learned counsel

for the petitioner that the petitioner was in possession of its portion of the

property since 2006. Now coming to the rejection of claim No. 41(i) by

the learned Arbitrator is concerned, I note, the same relates to claim of

interest on an amount of Rs. 25 lakhs paid by the petitioner to the

respondent. As is clear from the claim itself, the said amount was a non-

refundable deposit made to the respondent. There is no stipulation in the

contract that the petitioner would be entitled to the interest on the said

amount. On a specific query, no stipulation under contract was brought to

my notice. The learned Arbitrator in the award has concluded as under:

"I find that there is no provision in the agreement of collaboration dated 14.10.1996 for the payment of any interest on this amount of Rs. 2500,000/- deposited by the claimant. Interest claimed on the non-refundable deposit is not admissible as per the terms and conditions of the agreement of collaboration. There is no merit in the claim and claim No. 41(i) is rejected".

24. I agree with the aforesaid conclusion of the learned Arbitrator. It

need no interference.

25. Insofar as conclusion of the learned Arbitrator on claim No. 41(ii)

& (iii) with which both the parties are aggrieved with, the learned

Arbitrator has in para 26 of the award, proceeded to decide the said

claims by posing himself a question with regard to the date of

completion of the building. He on an interpretation of the provision of the

agreement of the collaboration dated October 14, 1996 has come to a

conclusion that the building was completed in June 2006 and not 2000.

The basis for him to come to such a conclusion was the interpretation

given by him by relying on Blacklaw Dictionary to the word

"completion" to mean finish, accomplished that which one start out to do.

He had further relied upon the agreement dated November 25, 2004

whereby the respondent had advanced a loan of Rs.38 Lakhs to the

petitioner for completion of the remaining work in the building including

installation of electric transformer and other allied matters, provided the

petitioner refunds the amount along with interest at bank rates before

execution of any document of transfer or part with possession of

basement of the building falling to its share. He also relied upon the

letter dated April 3, 2006 of the respondent addressed to the petitioner,

wherein the respondent had called upon the petitioner to complete the

remaining items of work as per Schedule-II of the agreement of

collaboration dated October 14, 1996 and also letter dated May 8, 2006

on similar lines.

26. The challenge to the award on the premise that the petitioner is

entitled to the damages w.e.f. June 2000, when the building was

completed is belied by the petitioner's own communication dated July

20, 2005 wherein the petitioner itself has stated as under:-

"With regard to completion of the Building on plot no.B- 19, Okhla before 09.07.2005, I would like to bring to your kind attention that the delivery of a project and speed in its implementation, are directly related to CPM (critical path method) as per ground rules of Programming & Management Practices. Therefore, I will like to record for your kind consideration the steps we have already covered and the tracks/paths on which we have already covered and the tracks/paths on which we are moving. Soon we will be able to cover the problems to reach our goals.

1. DDA has agreed to permit Freehold of the Plot B-19, Okhla.

2. DDA granted time extension of lease upto June 2000 so as to obtain completion, because of the two receipts one each for form C & form D. This has now opened up the tracks for completion of the building as per law.

3. Application for power, water and sewage has been made by M/s DBPL. M/s. DBPL are pursuing in the matter vigorously at a considerable cost.

4. Work on the Fire Fighting Installation will be over by next week. This will clear the grounds for obtaining completion certificate.

5. Once completion certificate is granted then the order for the release of the Freehold documents/ Conveyance Deed can be obtained.

6. Till such time we are able to get hold of the documents for Freehold we will be well advised not to occupy the building. This is necessary because of technical problems.

7. Knowing fully well, with regard to this entire situation and the complexities, we were in M/s DBPL never parted with the possession of, even one Inch out of the their share in the Agreement of Collaboration. M/s DBPL despite having all the authority as per the Agreement of Collaboration did not part with their share. This self control by M/s. DBPL has saved the situation. Therefore NCCF will be well advised to wait for the receipt of the actual Conveyance Deed before occupying the building.

8. NCCF should not worry about M/s. DBPL. We have behaved till now and we shall behave in future as well. Both of the parties to the Agreement of Collaboration must honour the commitments they have made in the Agreement. All we request is grant properly the share your honour had agreed as per the terms of the Agreement of Collaboration.

9. M/s. DBPL have never been responsible for any delay this case.

10. M/s. DBPL will not part with any portion of their share in the Agreement of Collaboration, till all the dues payable to NCCF are cleared by M/s. DBPL.

11. M/s DBPL even in any difficult situation will never forget the goodwill of each and every Member of the

Board, the Managing Committee as well as the NCCF Staff.

Considering these facts, I shall be grateful, if NCCF can release Rupees Five Lakhs, deducted by NCCF as penalty as soon as possible to help achieve our common goal. This is necessary considering the necessary costs being incurred by M/s. DBPL to get out of is entire mess. This is in fact beneficial to both the partners to the Agreement of Collaboration, rather more so for NCCF being the owners of the land having executed with DDA, as Institutional Lease for the plot B-19, Okhla designated for extensive Industries."

27. The aforesaid letter is a self speaking one which highlight the fact

that the building was not complete as there was no power, water and

sewerage facilities. Further, the work on fire fighting installation was

incomplete which is a prerequisite for obtaining a completion certificate.

This letter itself is in conformity with the conclusion of the learned

Arbitrator that the building was completed only in the year 2006. Hence,

the claim of the petitioner that the building was completed in the year

2000 falls flat and the petitioner could not have claimed the interest w.e.f.

2000.

28. Insofar as the stand of the petitioner that it could not carry out

further construction after March 21, 1997 because of respondent's

inability to obtain extension of time from DDA is concerned, I note that

no such case has been set up before the learned Arbitrator nor such a case

has been set up in the petition filed by the petitioner i.e. OMP 215/2010.

The learned counsel for the petitioner has also not shown me any

communication/letter from the petitioner to the respondent of the year

1997-98, wherein, the petitioner had called upon the respondent to seek

extension of time from the DDA so as to enable the petitioner to start the

work. He has also not shown any communication/letter of the respondent

calling upon the petitioner to stop the work after March 20, 1997.

Rather, I find that because of short of money, the petitioner had

approached HUDCO and the Bombay Mercantile Cooperative Bank Ltd.

for loan to construct the remaining portion of the building. It is also

noted that between August & October, 1999 after the loan was sanctioned

by the Bombay Mercantile Cooperative Bank Ltd., the petitioner started

the construction work, even though, there was no extension of time from

the DDA. This submission also needs to be rejected. A further issue

which falls for consideration is the one now raised by the counsel for the

respondent whether the petitioner would be entitled to interest of even

12% for the period after June 2006. To answer this question, one must

proceed keeping in view my above conclusion that the building was

ready for occupation only in the year 2006 not before that. The right of

the petitioner to hold the property would only arise when there is a

registered sale deed in its favour. The execution of the registered sale

deed will surely depend upon the petitioner discharging its liability

towards the respondent by paying the amounts as due to the respondent.

In fact, it is precisely what was conveyed by the respondent to the

petitioner vide its letter dated November 30, 2006, page 362 of the OMP

215/2010 wherein, the respondent has written to the petitioner as under:-

"We are in receipt of your letter dated 28.11.2006 regarding registration of your portion in the Okhla Building as per Agreement of Collaboration. In the above context, please refer to our letters of even No. dated 3.4.2006, 24.4.2006, 8.5.2006 and 12.6.2006 and subsequent meetings held with you when it was requested to make the payment of Rs.1,17,25,698.00 as per our books of accounts for the expenses incurred by us on your behalf. A copy of amount recoverable statement is again enclosed. You are once again requested to remit the amount immediately to this office enabling us to register your share as per Agreement of Collaboration dated 14.10.1996 and Agreement of Apportionment dated 24.4.2001."

29. In fact, I find, the award of 12% by the learned Arbitrator is

contrary to what has been concluded by him at page 21 of (page 59 of the

paper book) his award wherein he has directed the petitioner to pay the

respondent the amount awarded against the counter claims within a

period of three months from the date of the award. It was only on

receiving the counter claim amount from the petitioner, the respondent

was called upon to make the registration of the petitioner's share of

property of B-19, Okhla Industrial Area, Phase I, New Delhi with the

Registrar within a period of three months from the date of receiving the

amount from the petitioner. This part of the award of the learned

Arbitrator recognises the right of the respondent to receive the payments

as due to it from the petitioner before the execution and registration of

the sale deed with respect to the petitioner's share of the property.

Regrettably, the learned Arbitrator has overlooked this aspect before

awarding the 12% interest against claim No. 41(ii) & (iii). To that extent,

the award needs to be set aside. In view of my conclusion above that the

learned Arbitrator could not have even awarded 12% interest w.e.f. June,

2006, it would not be necessary for me to deal with the judgments

referred to by the learned counsel for the petitioner in M/s Susaka Pvt.

Ltd. (supra), Mohinder Pal Singh (supra), Hyder Consulting (UK) Ltd.

(supra) and The Managing Director, J. and K. Handicrafts, Jammu

(supra) to support his submission that when the parties have agreed

between them for interest @ 16.5%, no discretion vests with the

Arbitrator to award 12% simple interest per annum.

30. Insofar as claim No. 41(iv) is concerned, the learned Arbitrator has

concluded as under:-

"Ground Rent and House Tax, being demanded by NCCF to be borne by NCCF.

The respondent had denied any liability for the payment of this claim amount and stated that the Agreement of Collaboration dated 14.10.1996 Clause-9 provides that the statutory tax liability would be pertaining to their respective shares in the property. Clause 18 of the Agreement of the Collaboration stipulates that the owner and the builder should pay taxes and other statutory liabilities in respect of their respective share and meet their respective liability in built of structure. In view of the discussion I do not find any merit in this claim and therefore the claim that ground rent and house tax was to be borne by respondent NCCF is rejected."

31. I agree with the conclusion of the learned Arbitrator. It is an

accepted position that the petitioner has 50% share in the property. It is

logical that the liability of ground rent and house tax qua the petitioner's

share has to be the petitioner's liability. The petitioner cannot take

recourse to non execution of a sale deed in its favour. The non-execution

of the sale deed by the respondent has been justified by the learned

Arbitrator on the inability of the petitioner to discharge its liability

towards the respondent. The learned Arbitrator has rightly rejected the

claim.

32. Insofar as the claim No. 41(v) is concerned, the learned Arbitrator

has held as under:-

"The respondent had denied any liability towards the payment of Rs.37,00,000/- freehold charge of the claimants share of the property which is the responsibility of the claimant to pay. The respondent vide counter claim statement at page XVII had stated that on the request of claimant DBPL, respondent NCCF granted two loans of Rs.35 lakhs and Rs.37 lakhs for completion of remaining itself of works at Okhla project and for making 50% payment to the DDA on behalf of DBPL for making the property freehold respectively. The agreements dated 25.11.2004 and 17.03.2005 were executed by the respondent NCCF and claimant DBPL in this regard. Both the agreements are on record.

I find that the agreement dated 17.03.2005 provide that the 50% share of the claimant amounting to Rs.37,00,000/- towards the fees/charges for conversion of the aforesaid property from leasehold to freehold would be paid by the builder/claimant. The claimant had agreed that the basement floor of the building would be the first charge as a collateral security for this loan amount. In view of the discussion I do not find any merit in this claim. Therefore I reject this claim under para 41(V)."

33. I agree with the above conclusion of the learned Arbitrator and the

same was rightly rejected by the learned Arbitrator. That apart, insofar as

the reliance placed by the learned counsel for the petitioner on the

judgment of the Supreme Court in Booz-Allen and Hamilton Inc (supra)

is concerned, suffice to state, that, no such plea was raised before the

learned Arbitrator and hence, there was no occasion for the Arbitrator to

look into the said claim from the perspective as being contended by the

learned counsel for the petitioner. Even otherwise, the said judgment

would not be applicable in the facts of the present case. The Supreme

Court in the said case was concerned with an issue of arbitrability of

certain disputes arisen between the parties in the context of an application

under Section 8 of the Act. This was seen in the perspective that

whether, disputes having regard to the nature could be resolved by a

private forum chosen by the parties, the Arbitral Tribunal or whether they

would exclusively fall within the domain of public fora. The Supreme

Court was of the view that an issue relating to enforcement of a mortgage

being a suit for enforcement of right in rem has to be tried by the Court

not by the Arbitral Tribunal as it is not a mere money suit. This,

according to the Supreme Court, is because third party rights also get

intervened. Such is not the case here. Even assuming that the basement

was kept in charge against the loan advanced, still the dispute with regard

to the loan advanced was an inter se dispute between the parties herein.

In any case, no third party had sought an intervention in the adjudication

before the learned Arbitrator. The judgment has no applicability in the

facts of this case.

34. Insofar as rejection of counter claim No. 9(A) & 9(B) of the

respondent are concerned, I note, the learned Arbitrator while rejecting

the said counter claim has concluded as under:

"9.(A) RENT

Rent for the basement measuring 11353 sq. ft. @ Rs.12/- per sq. ft. per Month and rent for the ground floor measuring 11528 sq. ft. @ Rs.15/- Per sq. ft. per month for the period From 14.10.1998 to 30.04.2007 with escalation in rent @ 15% after every three years Rs.3,73,98,817.00

Add interest @ 16.5 compounded quarterly for the period from 14.10.98 to 30.04.07 Rs.3,60,06,703.00

Total Rs.7,34,05,520.00

The claimant had denied any liability towards this counter claim. He stated that the building could not be completed in time because of the problem of the Institutional lease of the property executed by the respondent with the DDA. The respondent in fact had requested the DDA for the grant of time extension for the completion of the building vide letter dated05.12.2003 and also for exemption of penalties for the delayed construction. DDA had granted time extension from

21.03.1997 to 30.06.200 and exempted penalty for the grant of freehold rights on the recommendations of the respondent. The respondent also had granted loans to the claimant for the completion of the building and payment of claimant's share of freehold charges paid to DDA. From this action of the respondent I come to the conclusion that the respondent had waived the right and condoned the delay in construction of the building. Therefore, there is no justification for the claim of interest in this counter claim. I do not find any justification for this counter claim of rent together with interest etc. The same is rejected.

Counter claim No.9B.

9(B) EXPENSES TOWARDS SECURITY Payment to the Security Agency for the period from 01.06.2000 to 31.03.07 Rs.10,48,519.00

Add Interest @ 16.5 compounded quarterly on the security expenses paid by the Respondent for the period from 01.06.2000 to 31.03.07 Rs.7,75,055.00

Total Rs.18,23,574.00

It was the responsibility of the respondent as the owner of the property to protect the same. I, therefore, find no justification for the counter claim of Rs.18,23,574.00. This counter claim is rejected."

35. I agree with the above conclusion, which is a finding of fact and

plausible reasoning with which this Court would not like to interfere.

36. In view of my above discussion, the petition filed by the petitioner

i.e. OMP 215/2010 is liable to be dismissed. I order accordingly.

37. Insofar as the petition filed by the respondent i.e. OMP 268/2010

needs to be allowed, to the extent that the award of the learned Arbitrator

allowing the claim of the petitioner to the extent he has granted damages

as simple interest @ 12% p.a. on the 50% of the investment amount,

excluding the non-refundable deposit of Rs. 25 lakhs w.e.f. June 2006 till

the date of actual payment, is set aside. The award is modified to the

aforesaid extent. The claims of the petitioner are liable to be dismissed

and the counter claims as awarded by the learned Arbitrator are upheld

without any modification. The OMP No.268/2010 is disposed of

accordingly.

(V.KAMESWAR RAO) JUDGE MAY 08, 2015/akb