New Delhi Municipal Council vs Applause Hospitality Services ...
2021 Latest Caselaw 222 Del

                          $~14
                          *      IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +      O.M.P. (COMM) 532/2020
                                 NEW DELHI MUNICIPAL COUNCIL      ..... Petitioner
                                             Through   :Mr. Anil Grover, Sr. Standing
                                                       Counsel with Mr. Yoginder
                                                       Handoo, Advs.

                                                    Versus

                                 APPLAUSE HOSPITALITY
                                 SERVICES PVT. LTD AND ANR         ..... Respondents
                                               Through  Ms. Leena Tuteja, Mr. Ishaan
                                                        Chawla and Ms. Diksha Bhatia,
                                                        Advs.
                                 CORAM:
                                 HON'BLE MR. JUSTICE C. HARI SHANKAR

                                             O R D E R (ORAL)

                          %                  22.01.2021
                                       (Video-Conferencing)

                          O.M.P. (COMM) 532/2020

1. Issue notice. Ms. Leena Tuteja, learned counsel for the respondents, accepts notice.

2. Counter affidavit, if any, be filed within a period of four weeks with advance copy to learned counsel for the petitioner, who may file rejoinder thereto, if any, within a period of two weeks thereof.

3. Inasmuch as, the petition is by way of challenge, under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "1996 Act"), to an award of the learned arbitrator, exchange of Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:23.01.2021 20:26:38 pleadings is not necessary. The Registry is, however, directed to requisition the arbitral records from the learned arbitral tribunal and have the same placed on record prior to the next date of hearing. A copy thereof would also be provided, by email, to learned Counsel for the parties.

4. Renotify on 15th April, 2021.

IA 10239/2020 (Section 151 CPC)

1. For the reasons stated in the application, delay in re-filing of the petition is condoned.

2. The application is allowed and disposed of.

IA 10237/2020 (Section 36(2) of the Arbitration and Conciliation Act, 1996)

1. Mr. Anil Grover, learned Senior Standing Counsel for the NDMC submits, at the very outset, that he is restricting his prayer for stay to the direction qua Claim IV of the respondents, who were the claimants before the learned arbitrator. The said direction, as contained in the operative part of the impugned award, may be reproduced.

"Claim IV: Allowed.

(i) The Claimants are entitled to carry on the business of Eating lounge/Bar from the Commercial Area of the project site subject to statutory permissions;

Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:23.01.2021 20:26:38

(ii) The show cause notice-cum-sealing order dated 25/02/2016 is contrary to the Concession Agreement and is illegal. The sealing of the Eating Lounge was illegal and in breach of the Concession Agreement;

(iii) The Respondent shall permit the Claimants to operate and carry out commercial activities from the Project Site, in terms of the Concession Agreement, without hindrance."

2. Mr. Grover has, essentially, sought to challenge the afore- extracted directions of the learned arbitrator on the ground that, as per the Master Plan for Delhi, 2021 (hereinafter referred to as "MPD 2021"), the area in question, forming subject matter of controversy, was not a "District Park", as it was less than 25 hectares and the MPD 2021 requires a District Park to be in excess of 25 hectares. He, however, acknowledges the fact that in the Concession Agreement, between the petitioner and the respondents, the area in question was described as a District Park. This fact also stands acknowledged in the short notes of the written submissions filed by the petitioner-NDMC before this Court, in which it is averred that the "erroneous statement", in the Concession Agreement, to the effect that the project site was a District Park, could not operate as an estoppel against the petitioner. He submits that the reference, in the Concession Agreement, to the project site as a 'District Park', was immaterial, as the NDMC was not empowered to grant concession against the law.

3. It is also acknowledged that the completion plans of the respondents were sanctioned by the NDMC, treating the area as a District Park. Again, on this point, too, it is sought to be contended

Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:23.01.2021 20:26:38 that the sanctioned completion plans could not override the MPD 2021.

4. Mr. Grover also sought to submit that, much prior to the execution of the Concession Agreement, the premises of the respondents were sealed on 25th February, 2016, on the ground that an eating house could not be run in a 'District Park'. Ms. Leena Tuteja, learned counsel for the respondents, however, traverses this submission of Mr Grover, and asserts that the sealing of the premises which took place in 2016 was not on the ground that the Eating House was in an area which was not a District Park, but, rather, on the allegation that the respondents were serving liquor. Moreover, she points out that, consequent to the sealing of the premises, the respondents moved an application under Section 17 of the 1996 Act, before the learned arbitrator, which was allowed by him on 5th June, 2018, and that the appeal thereagainst, preferred under Section 37(2) of the 1996 Act, by the NDMC, was withdrawn by the NDMC itself on 20th June, 2018 and the premises were de-sealed.

5. In any event, it appears that the sealing of the premises had nothing to do with the question of whether the premises were located in an area which was a 'District Park' or otherwise.

7. The learned arbitrator did take stock of the contention, of the NDMC, that the area in question was not a District Park. In this regard, para 23 of the impugned award reads thus:

"23. From the above, it is evident that the understanding of Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:23.01.2021 20:26:38 the parties with regard to the nature of the project site was that it comprised of the musical fountain area, the Children's Park area and the parking area as indicated in Map 1.1 to the said schedule 1 of the Concession Agreement. It is also clear that the project site had a total area of approximately 20,200 SQM. Furthermore, it had been represented by the Respondent that there was a cap of 20% of the area for commercial use. In other words, the Claimants could utilize approximately 4040 SQM for commercial activities such as eating lounges, kiosks and other activities permitted under the Concession Agreement. It is on this basis that the Claimants had submitted its bid which had been accepted by the Respondent. It was also represented by the Respondent and accepted by the Claimants that the Project Site was a District Park as per MPD 2021. This is the foundation of the bid submitted by the Claimants and the Concession Agreement. The contention of the learned counsel for the Respondent that the project site is not a District Park as per the MPD 2021 is not correct. It would be evident from the discussion below that DDA, the authority responsible for ensuring compliance with MPD 2021, had also referred to the project site as a District Park, as indeed, does the relevant Zonal Development Plan. Since the DDA also approved the plans, the Respondent cannot be heard to say that an Eating Lounge is not permitted at the Project Site. In any event, the Respondent had before and at the time of executing the Concession Agreement clearly and categorically represented that the Project Site was a District Park and commercial activities in an area upto a cap of 20% of the total area could be carried out."

(Emphasis supplied)

8. Clearly, therefore, the learned arbitrator has noticed the contention of the petitioner that as per MPD 2021, the area in question was not a District Park. He has rejected this contention on the following four grounds:

(i) The DDA, being the authority responsible for ensuring compliance with the MPD 2021, had referred to the project site Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:23.01.2021 20:26:38 as a District Park.

(ii) The Zonal Development Plan of the area also referred to the project site as a District Park.

(iii) The plans of the area stood approved by the DDA, so that the respondents could not be heard to say that an eating house was not permissible at the project site.

(iv) Even in the Concession Agreement executed by the petitioner, the project site was represented as a District Park, in which commercial activities over an area upto 20% of the site could be carried out.

9. Clearly, therefore, the learned arbitrator has held against the petitioner, specifically on the contention that the project site was not located in a District Park, by referring to the material on record. This finding, even if it is to be assumed, arguendo, not to be correct on facts, cannot, prima facie, merit interference under Section 34 of the 1996 Act, in view of the law enunciated by the Supreme Court in Ssangyong Engg. & Construction Co. Ltd. v. NHAI 1, which represents the authoritative legal position as it exists today.

10. The learned arbitrator has, inter alia, relied on the covenants of the contract between the NDMC and the respondent. An arbitrator, being a creature of the contract, cannot decide contrary to the

(2019) 15 SCC 131 Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:23.01.2021 20:26:38 convenants thereof. One of the select circumstances in which a Court may interfere with an arbitral award, under the 1996 Act, is that the award is contrary to the terms of the contract between the parties. What Mr Grover exhorts this Court to do is to interdict the operation of the impugned award for having decided the issue of whether the project site was located in a District Park, or not, in accordance with the contract between the parties. This, prima facie, is impermissible.

11. In view thereof, it cannot be said that the petitioner has been able to make out a prima facie case, as would justify interlocutory interdiction with the directions issued by the learned arbitrator qua Claim IV of the respondents.

11. Resultantly, the prayer for interim stay is rejected.

11. The application is dismissed.

C. HARI SHANKAR, J JANUARY 22, 2021 r.bararia

Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI

Signing Date:23.01.2021 20:26:38