Delhi High Court
V4 Infrastructure Private Ltd vs Jindal Biochem Private Ltd on 19 March, 2018
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 19.03.2018
+ O.M.P. (COMM) 352/2017
V4 INFRASTRUCTURE PRIVATE LTD .....Petitioner
Versus
JINDAL BIOCHEM PRIVATE LTD .... Respondent
AND
+ O.M.P. (COMM) 353/2017
V4 INFRASTRUCTURE PRIVATE LTD .....Petitioner
Versus
JINDAL BIOCHEM PRIVATE LTD .... Respondent
Advocates who appeared in this case:
For the Petitioner : Mr S.K. Chaturvedi and Mr Amit Sood.
For the Respondent : Mr Vikas Kakkar and Mr Vaibhav Tiwari.
in OMP (COMM) 353/2017.
CORAM
HON'BLE MR JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J
1. The petitioner (hereafter ʻVIPLʼ) has filed the present petitions
under Section 34 of the Arbitration and Conciliation Act, 1996
(hereafter 'the Act') impugning an arbitral award dated 20.05.2017
(hereafter 'the impugned award') rendered by the Sole Arbitrator,
Justice M.L. Mehta, Retired (hereafter 'the Arbitral Tribunal'). The
impugned award was rendered in the context of two Space Buyer
Agreements, both dated 07.10.2009. In terms of one of the said
agreement (hereafter 'the First Agreement'), VIPL agreed to sell three
shops bearing Unit Nos. 1, 2 and 3 on the front side of the property
constructed on Plot No. 228, Service Centre, Dwarka known as ʻV-4
Metro Square' (hereafter 'the Property'). The covered area of the said
three units measured 936.409 square feet, in aggregate. The second
Space Buyer Agreement pertains to the sale of 1435.758 square feet of
space on the second floor of the said commercial building (hereafter
'the Second Agreement').
2. The said two agreements were terminated by VIPL. In addition,
VIPL also constructed a basement in the property in question, which
according to the respondent (hereafter ʻJBPLʼ) was in breach of the
said two agreements. The disputes between the parties in relation to
the said agreements were referred to the arbitrator. By the impugned
award, the Arbitrator has allowed the claims preferred by JBPL and
has awarded an aggregate amount of ₹7.4 crores along with interest at
the rate of 18% per annum. In addition, the Arbitral Tribunal has also
awarded ₹10 lacs in favour of the respondent as cost for the litigation.
3. Briefly stated, the controversy between the parties arises in the
following context:-
4. VIPL purchased the property bearing no. 228, Sector 9, Service
Centre, Dwarka admeasuring 540 square meters in an auction
conducted by the Delhi Development Authority (DDA). At the
material time, VIPL was in the nature of a joint venture between two
groups, namely, Attar Singh Group and Jindal Group. Both the said
groups had equal representation on the Board of Directors of VIPL.
Certain disputes arose between the two groups and the Jindal Group
exited from the control and management of VIPL. VIPL further claims
that the two share purchase agreements dated 25.08.2009 and
30.08.2009 were entered into between its shareholders of VIPL
belonging to the said groups. It is further claimed that the said share
purchase agreements have attained finality. However, the controversy,
if any, relating to the said share purchase agreements is not relevant
for the purposes of the present proceedings.
5. VIPL and JBPL entered into two Space Buyer Agreements in
relation to the Property. The First Agreement pertains to the sale of
three shops bearing Unit Nos. 1, 2 and 3 on the front side of the
ground floor aggregating 936.409 square feet of covered area, which
was agreed to be sold to the JBPL at a consideration of ₹4.25 crores.
In terms of the Second Agreement, VIPL agreed to sell 1435.758
square feet on the second floor of the Property at a consideration of
₹3.15 crores.
6. Admittedly, JBPL paid the entire consideration as agreed under
the two Space Buyer Agreements. JBPL claimed that VIPL had
initially handed over the possession of the built up space purchased in
terms of the said two agreements but had forcibly re-possessed the
same by breaking open the locks. VIPL disputes the same and claims
that the Property was completed and an occupancy certificate was
granted on 19.04.2010 but the physical possession of the Property was
not handed over to JBPL as JBPL failed and neglected to pay the
maintenance charges and to execute the agreement for maintenance of
the Property (Maintenance Agreement). VIPL further claims that
JBPL also failed to pay proportionate charges for installation of a lift.
7. VIPL terminated the two Space Buyer Agreements by letter
dated 19.08.2011 on the alleged ground of failure on the part of JBPL
to pay the proportionate charges for installation of the lift and to
execute the Maintenance Agreement.
8. In the aforesaid context, the disputes between the parties were
referred to arbitration. In the Statement of Claims filed before the
Arbitral Tribunal, JBPL claimed for specific performance of the Space
Buyer Agreements as well as damages for failure to handover
possession of the Property along with interest. JBPL also sought
rendition of accounts. In the alternative, JBPL claimed refund of the
entire sale consideration paid for the Property (₹4.25 crores and ₹15
lacs pertaining to the ground floor and ₹3.15 crores alongwith ₹20 lacs
paid towards the second floor) along with interest at the rate of 24%
per annum.
9. In addition to the above, JBPL also claimed refund of certain
amounts on account of difference in the area as stated in the Space
Buyer Agreements and as agreed to be allotted by VIPL.
10. After considering the pleadings of the parties, the Arbitral
Tribunal framed several issues. One of the principal issues was
whether the notice dated 19.08.2011 issued by the VIPL for
terminating the Space Buyer Agreements in question was legal and
whether JBPL had failed to discharge any of its obligations under the
said agreements. The Arbitral Tribunal considered the said issue and
found that the JBPL had not committed any breach of the Space Buyer
Agreements as alleged by VIPL in its termination notice dated
19.08.2011. Accordingly, the Arbitral Tribunal held the termination
notice to be illegal.
11. The Arbitral Tribunal also concluded that JBPL had not only
paid the entire consideration of ₹7.4 crores (₹3.15 crores for the
second floor and ₹4.25 crores for the ground floor) but had also paid a
sum of ₹35 lacs over and above the said consideration as proportionate
charges for development of the external facade.
12. Insofar as the issue regarding the construction of basement is
concerned, the Arbitral Tribunal found that the construction was not as
per the sanctioned plan dated 12.03.2008. The said basement had been
constructed after the building had been raised. The basement had been
approved by the DDA in March/April 2010 subject to the payment of
compounding charges. The Arbitral Tribunal found that
notwithstanding that the construction of the basement was
subsequently approved by the DDA, the same was in violation of
Clauses (c) and (e) of the Space Buyer Agreements, wherein VIPL had
represented that it had observed the terms and conditions of the
sanctioned plan and the construction was being done in accordance
with the sanctioned plan.
13. In view of the above, the Arbitral Tribunal rendered an award
for refund of the amount paid by JBPL being ₹7.40 crores plus ₹35
lacs along with interest at the rate of18% per annum from the date of
payment, till the date of actual realization.
Submission
14. Mr S.K. Chaturvedi, the learned counsel appearing for VIPL
had assailed the impugned award on two fronts. First, he submitted
that JBPL had sought the relief for specific performance of the Space
Buyer Agreements and once the Arbitral Tribunal had found the
termination of the Space Buyer Agreements to be illegal, it would
necessarily follow that the JBPLʼs claim for specific performance
ought to have been allowed. However, the Arbitral Tribunal had
grossly erred in not considering the JBPLʼs claim for specific
performance but has directed refund of the consideration paid by
JBPL. Second, he submitted that the Arbitral Tribunal had also
decided the issue relating to existence of an escrow account, which
was not a subject matter of the agreements. He submitted that the
impugned award was, thus, without jurisdiction.
15. Mr Chaturvedi, also made feeble attempt to argue that the
termination of the Space Buyer Agreements by VIPL was legal and
the conclusion of the Arbitral Tribunal was patently erroneous.
Reasons and Conclusion
16. The contention that the impugned award is patently illegal
inasmuch as the Arbitral Tribunal has granted the alternate relief of
return of consideration along with interest instead of directing specific
performance of the agreements in question, is unsustainable. The
learned counsel appearing for JBPL had also pointed out that JBPL
did not press for the relief for specific performance and, thus, no issue
was struck in this regard. The Arbitral Tribunal had also specifically
noticed in the impugned award that the petitioner had not setup a case
for specific performance. Thus, even though JBPL had in its
statement of claims sought the relief for specific performance of the
agreements. The said relief was not pressed and, therefore, the Arbitral
Tribunal had struck no issue in this regard.
17. Further, it would be at the discretion of the Arbitral Tribunal
whether to award specific performance of the agreements or to award
damages in lieu thereof.
18. In view of the above, this Court finds no infirmity with the
decision of the Arbitral Tribunal to award damages having found that
the action of VIPL in terminating the agreements was illegal. This
Court also finds no infirmity with the decision of the Arbitral Tribunal
in awarding the refund of consideration paid by JBPL alongwith
interest.
19. The contention that the impugned award is without jurisdiction
as the agreements in question (Space Buyer Agreements) do not
mention any arrangement regarding an escrow account, is also
unmerited.
20. The findings of the Arbitral Tribunal with regard to the escrow
account and the settlement ─ although of not much relevance ─ were
rendered in the context of the pleadings of the parties and the issues
struck on that basis. It is also relevant to state that the relief granted
by the Arbitral Tribunal is not based on any finding relating to the
escrow account or the settlement arrived at between the two groups.
Thus, this Court finds no ground to interfere with the impugned
award.
21. The contention that the Arbitral Tribunal had erred in holding
that the termination of the agreements was illegal is also unmerited.
The Arbitral Tribunal had after appreciating the evidence concluded
that there was no breach on the part of the JBPL as alleged by VIPL
and, therefore, its action in terminating the agreements on the basis of
such alleged breach was illegal.
22. The findings that JBPL had not breached any of its obligations
under the agreements in question are the findings within the
jurisdiction of the Arbitral Tribunal. Such findings are based on
material placed on record and cannot by any stretch be stated to be
patently illegal or perverse.
23. It is well settled that the scope of judicial review under Section
34 of the Act is limited and an Arbitral Award cannot be interfered
with except on the grounds as set out under Section 34 of the Act. The
impugned award is neither opposed to public policy nor can be stated
to be patently illegal.
24. In view of the above, the above petitions are dismissed as
unmerited. The parties are left to bear their own costs.
VIBHU BAKHRU, J
MARCH 19, 2018
RK
