Delhi High Court
Lt Col (Retd) H S Bedi & Anr. vs M/S North Star Apartment Pvt Ltd. & ... on 12 December, 2018
$~7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 12.12.2018
+ FAO (OS) (COMM) 237/2018
LT COL (RETD) H S BEDI & ANR. ..... Appellants
Through: Mr. Ashin Vachher, Adv.
versus
M/S NORTH STAR APARTMENT PVT LTD. & ANR ..... Respondents
Through: None.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN
PRATEEK JALAN, J (ORAL)
%
1. This appeal is directed against a judgment dated 21.02.2018
passed by the learned Single Judge dismissing the appellants'
petition under Section 34 of the Arbitration and Conciliation Act,
1996 (hereinafter referred to as "the Act"), which had sought
setting aside of an arbitral award dated 18.07.2017 (as amended on
28.08.2017).
2. By a flat buyers' agreement dated 17.05.2007 (hereinafter
referred to as the "Agreement"), the appellants had agreed to
purchase a flat in a building which was under construction by the
respondents. It was mentioned in the agreement that the
FAO (OS) (COMM) 237/2018 Page 1 of 5
approximate super area of the proposed flat was 7875 sq. ft. and
the parties agreed to a sale consideration of Rs. 4,80,37,500/- for
the same. For the purposes of the present appeal, Clause 1.2 (d)
and Clause 7.2 of the Agreement are relevant. They are set out
below:-
"Clause 1.2(d)
"Super Area"
It is made clear that the super area of the FLAT as defined in
Annexure-II is tentative and subject to change till the
construction of the GROUP HOUSING COMPLEX is complete.
The SALE PRICE payable shall be recalculated upon
confirmation by the DEVELOPER of the final super area of the
said FLAT and any increase or reduction in the super area of
the said FLAT shall be payable or refundable, without any
interest, at the same rate per square feet as agreed herein
above. If there shall be an increase in super area, the FLAT
BUYER(S) agrees and undertakes to pay for the increase in
super area immediately on demand by the DEVELOPER and if
there shall be a reduction in the super area, then the refundable
amount due to the FLAT BUYER(S) shall be adjusted by the
DEVELOPER from the final Installment as set forth in the
schedule of payments appended in Annexure 1.
Clause 7.2
Major Alternation/Modification
In case of any major alternation/modification resulting in
excess of 10% change in the super area of the FLAT in the sole
opinion of the DEVELOPER any time prior to and upon the
grant of occupation certificate, the DEVELOPER shall intimate
the FLAT BUYER(S) in writing the changes thereof and the
resultant change, if any, in the SALE PRICE of the FLAT to be
paid by him/her and the FLAT BUYER(S) agrees to deliver to
the DEVELOPER in the SALE PRICE of the FLAT to be paid
by him/her and the FLAT BUYER(S) agrees to deliver to the
DEVELOPER in writing his/her/their consent or objections to
FAO (OS) (COMM) 237/2018 Page 2 of 5
the changes within thirty (30) days from the date of dispatch by
the DEVELOPER of such notice failing which the FLAT
BUYER(S) shall be deemed to have given his/her/their full
consent to all such alternations/modifications and for
payments, if any, to be paid in consequence thereof. If the
written notice of the FLAT BUYER(S) is received by the
DEVELOPER within thirty (30) days of intimation in writing by
the DEVELOPER indicating his/her/their non-
consent/objections to such alternations/modifications as
intimated by the DEVELOPER to the FLAT BUYERS, then in
such case alone this Agreement shall be cancelled without
further notice and the DEVELOPER shall refund the money
received from the FLAT BUYERS(S) within sixty (60) days from
the date of intimation received by the DEVELOPER from the
Flat Buyers. On payment of the money after making deductions
as stated above the developer shall be released and discharged
from all its obligations and liabilities under this Agreement. In
such a situation, the DEVELOPER shall have an absolute and
unfettered right to allot, transfer, sell and assign the FLAT and
all attendant rights and liabilities to a third party. It being
specifically agreed that irrespective of any outstanding amount
payable by the DEVELOPER to the FLAT BUYER(S), the FLAT
BUYER(S) shall have no right lien or change on the FLAT in
respect of which refund as contemplated by this clause is
payable."
3. It appears that, at the time of offering the possession of the flat, by a
letter dated 28.01.2014, the respondent informed the appellants that the
constructed flat was of a super area of 13,000 sq. ft. and demanded an
additional amount of ₹3,77,64,767/- under various heads. This led to
considerable correspondence between the parties, and, ultimately,
institution of proceedings before a Sole Arbitrator. The appellants also
approached this Court under Section 9 of the Act wherein this Court passed
an order dated 13.01.2016, restraining the respondent from transferring and
alienating the flat in question. Before the learned arbitrator, the appellants
FAO (OS) (COMM) 237/2018 Page 3 of 5
claimed possession of the flat of the area mentioned in the agreement, and
interest upon the amount paid by the appellants to the claimant. The
claimants made an alternative prayer for refund of the amount paid
alongwith interest. Certain counter claims were also raised by the
respondent with which we are not concerned in these proceedings.
4. The learned arbitrator ultimately made an award dated 25.02.2016
wherein he held that the increase in the super area was contractually
permissible, but found that the appellants had objected to the same by their
communication dated 02.02.2014. The learned arbitrator therefore, awarded
the alternative claim of the appellants for the refund of the amount paid by
them. However, the learned arbitrator declined the prayer for interest on the
ground that the appellants had not sought cancellation of the agreement and
return of their payments, and had instead throughout contended that the
increase in the super area was itself impermissible.
5. Against the award, both parties approached this Court under Section
34 of the Act and both the petitions have been dismissed by the impugned
order. The contention of the appellants herein was that they were entitled to
interest upon the payment made which had been wrongly declined by the
arbitrator. The learned Single Judge has upheld the reasoning and the
conclusion of the learned arbitrator.
6. Learned counsel for the appellants submitted that the obligation of
the respondent to refund the payment made by the appellants arose
automatically under Clause 7.2 of the agreement once they had objected to
the increase in the super area. Such refund not having being made within 60
days, he submits that the respondent was liable to pay interest there upon.
FAO (OS) (COMM) 237/2018 Page 4 of 5
7. We are unable to agree with this contention. Clause 7.2 properly
interpreted admits of only two possibilities: either the allottee accepts the
increase in the super area and makes payment accordingly, or the allottee
objects and the agreement is cancelled leading to a refund of the amount
paid. The appellants chose neither of these options at the outset but insisted
upon performance of the agreement at the original stipulated super area.
The injunction passed by this Court at their instance deprived the
respondent of the opportunity to sell the flat to any other willing buyer at
the time. Even before the arbitrator, the principal contention of the
appellants was that the flat as originally agreed ought to be allotted to them.
Their contention in the proceedings under Section 34 of the Act is wholly
inconsistent with this stand, as they now claim an automatic entitlement to
the refund, alongwith interest, by operation of Clause 7.2. The Arbitral
Award is based on a reasonable interpretation of the agreement and an
appreciation of the correspondence placed by the parties. In our view, the
conclusion reached by the learned arbitrator cannot in these circumstances
be interfered with under Section 34 of the Act.
8. For the reasons aforesaid, the appeal is dismissed, but without any
order on costs.
PRATEEK JALAN,J.
S. RAVINDRA BHAT,J
DECEMBER 12, 2018
„pv‟
