Delhi High Court
M/S Randhawa Construction Pvt ... vs M/S Hcbs Promoters And Developers ... on 16 February, 2022
$~16(2022)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 16th February, 2022
+ ARB. A. (COMM.) 10/2022 and IA No. 2325/2022
M/S RANDHAWA CONSTRUCTION
PVT LTD. ..... Appellant
Through: Mr Pragyan Sharma and Mr
Parmanand Yadav, Advocates.
Versus
M/S HCBS PROMOTERS AND DEVELOPERS
PVT LTD. ..... Respondent
Through: Mr Sankalp Goswami, Advocate.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
VIBHU BAKHRU, J. (ORAL)
[Hearing held through videoconferencing]
1. The appellant (hereafter 'RCPL') has filed the present appeal
under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996
(hereafter 'the A&C Act') impugning a common order dated
15.12.2021 passed by the Arbitral Tribunal constituted of a Sole
Arbitrator (hereafter 'the Arbitral Tribunal'). By the said order the
Arbitral Tribunal disposed of five applications: two moved by RCPL on
04.06.2021 and 03.08.2021 (the appellant) and three moved by the
respondent on 06.10.2021 and 13.09.2021 (hereafter 'HCBS').
Signature Not Verified
Digitally Signed
By:Dushyant Rawal
2. Before proceeding further, it would be relevant to note the factual
context in which the present disputes arise:-
2.1 On 11.06.2013, the parties entered into a Collaboration
Agreement (hereafter 'the Agreement'). In terms of the Agreement,
HCBS had agreed to develop an 'Affordable Residential Group
Housing Complex' on the land owned by RCPL (land admeasuring
6.85625 acres located in Sectors 2 and 35, Tehsil Sohna, District
Gurgaon). Further, in terms of Clause 2 of the Agreement, HCBS had
agreed procure, at its expense, the requisite licenses, permissions,
sanctions, and approvals from the competent authorities. It had also
agreed to bear all costs and expenses for the Project. RCPL agreed to
place the land owned at the disposal of HCBS and to grant HCBS "all
the authority of the OWNERS as may be necessary for obtaining the
requisite licence, permissions, sanctions and approvals for
development, construction and completion of the proposed complex"
on the subject land. It was agreed that the revenue generated from the
sale of saleable residential area would be shared between HCBS and
RCPL in the ratio of 72:28. The commercial area would be shared in
the ratio of 86:14.
2.2 Thereafter, on 07.09.2013, 29.10.2013 and 08.11.2013, three
Addendum Agreements were executed between the parties, in addition
to the Agreement.
2.3 Pursuant to execution of the Agreement, HCBS was granted the
Letter of Intent dated 04.12.2013. Thereafter, on 11.06.2014, the license
for development of the said land was issued by the Directorate of Town
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Digitally Signed
By:Dushyant Rawal
and Country Planning (DTPC), Haryana and the building plans were
approved on 01.10.2014.
2.4 In terms of the Agreement, the parties entered into an Escrow
Agreement dated 02.07.2015 (with respect to account no.
000280200000419) with Yes Bank Ltd., for receipt of all the proceeds
received from the sale of the apartments (hereafter the 'Escrow
Agreement').
2.5 RCPL claims that pursuant to a request made by HCBS, it paid
an advance of ₹2,07,66,666/- to HCBS and to the contractor engaged
by HCBS (M/s Millennium Engineers Ltd.) to develop the housing
complex as HCBS was facing financial constraints.
2.6 The Real Estate Regulation Act, 2017 (hereafter 'RERA') came
into force on 01.04.2017. In view of the same, HCBS, by a letter dated
09.05.2017, requested RCPL to revise the Escrow Agreement in
accordance with Section 4(2)(l)(D) of the RERA and to provide for
deposit of 70% of the amount realized for the Project from the allottees
in a separate bank account to be maintained with a scheduled bank to
cover the costs associated with construction and the land. RCPL claims
that the same was unnecessary as the amounts were already being
deposited in an earmarked escrow account.
2.7 Thereafter, by a letter dated 13.12.2017, HCBS informed the
petitioner that out of the payment received from the clients and
customers in the escrow account, (a) 10.714% was being transferred to
HCBS Sports Ville Statutory Dues account; (b) the balance amount was
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Digitally Signed
By:Dushyant Rawal
being transferred to the HCBS Promoters and Developers Private
Limited Sports Ville collection in RERA account number ending with
000266300000506; and (c) the amount received in the HCBS Promoters
and Developers Private Limited Sports Ville collection RERA account
number ending with 000266300000506 would be transferred in
accordance with the stipulated share allocations stated out in the
Agreement, to the respective accounts of the parties.
2.8 RCPL alleges that in the month of July, 2018, it came to know
that HCBS had, without its consent, diverted the funds from its existing
escrow account no. 000280200000419 to another account no.
000280200003755 maintained with Yes Bank Ltd.
2.9 By a communication dated 23.07.2018, RCPL sought
explanation for the same from HCBS. HCBS responded to the aforesaid
communication on 24.07.2018 and stated that it was following the same
procedure as before.
2.10 Thereafter, on 07.08.2018, HCBS through its representative sent
a collection summary to RCPL. RCPL alleged that an amount of
₹75,09,332/- was payable by HCBS, in addition to the amounts that had
already been transferred from one escrow account to the other and the
amounts deposited in the non-escrow account.
2.11 In view of the disputes between the parties, RCPL issued a legal
notice dated 12.09.2018 and called upon HCBS to revert all payments
received under the Project, which were made to the personal/other
account of HCBS and to ensure that in the future, all further payments
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By:Dushyant Rawal
were transferred to the escrow account and allocated as per the share
allocation of the parties as contained in the Agreement. RCPL states
that the said notice did not invoke any response from HCBS.
2.12 RCPL has also averred that in the year 2019-2020, HCBS had
changed the layout plan of the Project without its consent and shifted
the areas allocated for the commercial activities, to the stilt areas of the
Project. And, the same has resulted in causing huge losses to RCPL. It
is further alleged that HCBS had encroached on an area of
approximately 500 sq. meters. of adjoining land belonging to the
petitioner, and constructed a park thereon.
2.13 RCPL also alleges that several attempts were made by it to
reconcile the accounts with HCBS, however, such attempts were in
vain. Since the Escrow Agreement had expired on 31.03.2020, the same
was extended till 31.03.2021.
2.14 HCBS received the Occupation Certificate in respect of the
Project on 04.06.2020.
2.15 Thereafter, HCBS, by a communication dated 18.06.2020,
informed RCPL that it had undertaken overall reconciliation of the
accounts, sold the inventory and demarcated the units to be allotted to
RCPL. HCBS further called upon RCPL to refund the security deposit
of ₹31 lacs paid by it, as according to it, no sum was payable to RCPL
as the units had been allotted to it. RCPL responded to the aforesaid
communication by its emails dated 19.06.2020 and 06.08.2020 and
requested HCBS to settle the disputes.
Signature Not Verified
Digitally Signed
By:Dushyant Rawal
2.16 RCPL alleges that in the month of January, 2021, it became
aware that HCBS had sold more than a hundred housing
units/apartments, without crediting the payment in the designated
escrow account, as stipulated in the Escrow Agreement and Agreement.
3. In view of the disputes, RCPL filed a petition under Section 9 of
the A&C Act [being OMP (I) COMM 27/2021] seeking interim relief.
This Court, by an order dated 25.01.2021, directed HCBS to ensure that
all amounts received from the Project, under all heads including, inter
alia, amounts paid by the allottees of the housing units, are credited into
Escrow Account no. 000280200000419, held with Yes Bank. This
Court further restrained HCBS from receiving the funds in any other
account. HCBS had filed a reply seeking vacation of the
aforementioned ex-parte interim order.
4. By an order dated 25.03.2021, this Court disposed of the said
petition. This Court appointed the Sole Arbitrator to adjudicate the
disputes between the parties and directed that the reply filed by HCBS
be treated as an application under Section 17 of the A&C Act before the
learned Arbitrator.
5. On 04.05.2021, RCPL filed a Statement of Claims before the
Arbitral Tribunal which it termed as "Preliminary Arbitration Claim".
The prayers made by RCPL in its Statement of Claims are relevant and
set out below:-
"A. Rendition of accounts (As already prayed for in the
application under section 17 of the Act).
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By:Dushyant Rawal
B. Payment of a sum amounting to Rs. 20 Crores (In
Estimation to the share of the claimant in the sale
proceeds in accordance with clause 15 of the
collaboration agreement).
C. Allotment of 27% commercial FAR of the entire
available Commercial FAR with the consent of the
claimant.
D. Return of the land earmarked for commercial FAR
construction and not utilised for the same by the
respondent.
E. Compensation for Non-Construction of the
Commercial FAR at the designated site to the extent of
Rs. 3 Crores
F. Compensation for money saved by the respondent
for non constructing the Commercial FAR at the
designated site to the extent of Rs. 2.25 Crores.
G. Return of possession of the land encroached (580 Sq
metres i.e. 1 Kanal 04 Marlas) upon by the respondent
with continuous unfettered access from inside the
project to the encroached land and/or in the alternative
a sum of Rs. 1,55,00,000/- (Rupees One Crore Fifty
Five Lacs Only) as compensation for the same.
H. Award of interest @18% per annum on a sum of Rs.
2,07,66,666/- (Two Crores Seven Lacs Sixty-Six
Thousand Six Hundred Sixty-Six Only) w.e.f from
01.02.2019 upto the date of the grant of occupation
certificate i.e. 04.06.2020 i.e. a total sum of Rs.
52,95,499/- (Rupees Fifty-Two lacs Ninety-Five
Thousands Four Hundred Ninety Nine Only).
I. Award Cancellation and/or direct the respondent to
cancel the allotments issued to the near and dear ones
of the respondent and/or where the customers have not
made complete payments despite having received offer
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By:Dushyant Rawal
of possession and/or demands for possession and have
not taken possession upto today. Especially those
where the customers have not made the payment of
more than 40% of the amount and have not come
forward to make the payments.
J. Direct the respondent to continuously comply with
the terms and conditions of the collaboration agreement
until the entire sale consideration and the sums due
towards the claimant are not received from the sale of
the apartments and also the completion certificate of
the project is not received by the respondent.
K. Pass an award to the effect that the fourth addendum
dated 20th January 2016 and the Letter Dated 24th may
2016 allegedly relied upon by the respondent are
illegal, null and void ab-initio and not binding upon the
rights of the claimant in any manner whatsoever.
L. Compensation to the tune of Rs. 5 Crores for mental
agony, harassment and non-compliance of the terms
and conditions of the collaboration agreement.
M. With any other order which this Hon'ble Tribunal
may deem fit and proper be also passed in favour of the
claimant and against the respondent."
6. HCBS contested the aforesaid claims and filed its Statement of
Defence on 24.05.2021. It had also raised counter claims before the
Arbitral Tribunal.
7. Thereafter, on 04.06.2021 and 03.08.2021, RCPL filed
applications before the Arbitral Tribunal to direct HCBS to place on
record certain documents/data and provide information in response to
the interrogatories sought by RCPL.
Signature Not Verified
Digitally Signed
By:Dushyant Rawal
8. On 10.07.2021, the Arbitral Tribunal disposed of RCPL's
application (which was filed before this Court as a petition under
Section 9 of the A&C Act) under Section 17 of the A&C Act. The
Arbitral Tribunal modified the interim order dated 25.01.2021 passed
by this Court and, inter alia, restrained the parties from creating any
charge on commercial space of the subject complex by way of sale,
mortgage, lien, lease etc. till further orders were passed by the Arbitral
Tribunal.
9. Aggrieved by the aforesaid order passed by the Arbitral Tribunal
on 10.07.2021, HCBS filed an appeal under Section 37 (2) (b) of the
A&C Act [being ARB A. (COMM) 43 of 2021], inter alia, impugning
the direction restraining the parties from selling, transferring or
encumbering the commercial space.
10. By an order dated 08.09.2021, this Court set aside the order
passed by the Arbitral Tribunal to the extent that it interdicted the
parties from dealing with the commercial space in the Project and
remanded the matter back to the Arbitral Tribunal.
11. Thereafter, on 13.09.2021, HCBS filed an application before the
Arbitral Tribunal seeking directions in terms of the order dated
08.09.2021 passed by this Court. HCBS prayed that directions be issued
to RCPL to demarcate 27% of the commercial area of its choice and
pass injunction/stay only qua the said 27% of the commercial area
demarcated in terms of the order dated 08.09.2021 passed by this Court.
Signature Not Verified
Digitally Signed
By:Dushyant Rawal
12. On 06.10.2021, HCBS filed two applications before the Arbitral
Tribunal seeking to (i) amend the Counter-claims to include a claim on
account of refund given to the customers in case of cancellations, which
amounted to ₹17,71,402/- along with interest; and (ii) directions be
passed to RCPL to comply with the Affordable Housing Policy and pay
27% of the share in respect of refunds made to the customers on
cancellation of bookings amounting to ₹40,28,474/-.
13. By the impugned order, the Arbitral Tribunal, inter alia, directed
as under:
"(ii) The claimant is given option to identify 27% of the
commercial FAR of the project within two weeks and
communicate his choice in writing to the Tribunal and the
respondent / his counsel and that the respondent shall be
restrained from creating any charge on the aforesaid 27%
FAR of the commercial space by way of sale, mortgage, lien
etc. It is clarified that the respondent shall be at liberty to deal
with the remaining FAR of the commercial space.
(iii) In order to balance the equities, the claimant, if he so
desires, is given option to split the 27% opted by him in two
parts, namely, first preference 14% and second preference
13%. In that eventuality, the claimant shall be entitled to
transfer or sell or deal with first preference 14% in any
manner whatsoever but the parties shall be restrained from
creating any charge on the second preference 13%
commercial space by way of sale, mortgage, lien etc."
14. Thereafter, on 30.12.2021, RCPL requested the Arbitral Tribunal
to grant it further two weeks' time to comply with the impugned order.
However, HCBS, by an email dated 05.01.2022, communicated to
RCPL that they were "treating the earmarking of 27% commercial area
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By:Dushyant Rawal
given by you in the email dated 21.06.2021 as final and shall be
proceeded accordingly".
15. RCPL filed the present appeal assailing the impugned order and
praying as under:
"A. Allow the present appeal and set aside the impugned
order dated 15.12.2021;
B. Allow the Prayer B, C and D of the appellant in its
application under Section 17 of the Act, thereby directing
the following:
(i) Restrain the respondent from transferring or
alienating or receiving a booking in respect of the
any apartment or commercial shop or any other
charge in respect of the apartments without the
permission of this Hon'ble Court.
(ii) Appoint a Forensic Auditor to audit the
accounts of the entire project and the entire
accounts books of the respondent in the interest of
justice.
(iii) Direct the respondent to handover all the
details of all the customers whether live or
cancelled, all/ any amount received from all the
customers, details of interest charged from the
customers, details of unsold flats etc.
C. Allow the application dated 03.08.2021 of the claimant to
seek the documents praying for the documents as detailed
therein.
D. Dismiss the application dated 13.09.2021 of the
respondent on account of the forgery committed while
obtaining the changed building plan approval of commercial
component and restrain the respondent from alienating any
part of the commercial component owing to such acts;
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Digitally Signed
By:Dushyant Rawal
E. Restrain the respondent from receiving any monies out of
the escrow account so that the claims of the claimant could
be protected and are not vitiated in any manner;
F. Direct the respondent to furnish Bank guarantee to protect
the claim amount of the claimant i.e. Rs. 25 Crores owing to
the worsening financial condition of the respondent and the
respondent fast selling all its assets i.e. apartments.
G. With any other order which this Hon'ble Court may also
pass as considered just fit, proper and expedient in the
circumstances of the case."
Submissions
16. Although several prayers have been made, the learned counsel
appearing for RCPL has assailed the impugned order on two fronts.
First, he submitted that the Arbitral Tribunal had grossly erred in
permitting HCBS from dealing with the commercial space (other than
27% to be demarcated by RCPL) as the Arbitral Tribunal had failed to
consider that HCBS had obtained an approval of the changed building
plan with respect to the commercial component, by committing forgery.
17. Second, he submitted that the Arbitral Tribunal had erred in not
allowing RCPL's application for providing necessary documents and
the necessary access to software. He submitted that the Arbitral
Tribunal had failed to appreciate that the documents necessary for
adjudication of the dispute were not provided to RCPL.
Reasons and Conclusion
18. At the outset, it is relevant to note that the appellant had initially
filed an application under Section 9 of the A&C Act before this Court
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By:Dushyant Rawal
seeking the following reliefs [as noted by this Court in the order dated
25.01.2021 passed in OMP(I)(COMM) 27/2021]:
"A. Direct the respondent to ensure that all the
funds received in respect of the project from the
customers in all heads must be credited to the
escrow account No. 000280200000419 held with
Yes Bank under the escrow agreement and
restrain the respondent from receiving the funds
in any other account other than the escrow
account during the pendency of the present
proceedings;
B. Restrain the respondent from transferring
or alienating or receiving a booking in respect of
any apartment or commercial shop or any other
charge in respect of the apartments without the
permission of this Hon'ble Court.
C. Appoint a Forensic Auditor to audit the
accounts of the entire project and the entire
accounts books of the respondent in the interest of
justice.
D. Direct the respondent to handover all the
details of all the customers whether live or
cancelled, all/any amount received from all the
customers, details of interest charges from the
customers, details of unsold flats etc.
E. Direct the respondent to remove the
encroachment from the land of the petitioner as
reflected in Red colour in the map.
F. Direct the respondent to provide the
petitioner with the copies of the consent letter of
the respondent received from the customers in
respect of the change of the location of the
commercial part of the project.
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By:Dushyant Rawal
G. With any order which his Hon'ble Court
may also pass as considered just fit proper and
expedient in the circumstances of the case."
19. This Court had noted the rival contentions and had passed an ad
interim order, inter alia, directing that all amounts received from the
project be credited into the Escrow Account No. 000280200000419
maintained with Yes Bank Ltd. In addition, the Court had directed that
any booking of the housing unit by HCBS would be at its own risk and
would abide by the outcome of the proceedings.
20. It is important to note that this Court had not granted any blanket
stay restraining HCBS from dealing in the commercial space. HCBS
filed a detailed reply contesting the allegations made by RCPL and
sought vacation of the said ad interim order. As noted above, this Court
disposed of the stay petition under Section 9 of the A&C Act by
directing that the same be treated as an application under Section 17 of
the A&C Act.
21. The said application was heard and disposed of by the Arbitral
Tribunal by an order dated 10.07.2021. The operative part of the said
order reads as under:
"19. In view of the discussion above, in order to balance
the equities and to protect the rights of the respective
parties, the interim order dated 25.01.2021 is modified
and the modified order shall read as under:
(i) Respondent is directed to ensure that all amounts
received from the allottees of the housing units excluding
(a) Meter Charges, (b) Security Deposit, (c) Cess, (d)
Interest free maintenance security, (e) Common area
maintenance charges, (f) Electricity consumption
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By:Dushyant Rawal
charges, (g) VAT, (h) GST and other taxes payable to the
Government shall be credited into Escrow account No.
000280200000419 with the YES Bank provided that the
respondent shall maintain upto date accounts of the above
referred excluded charges received from the allottees and
produce the same whenever required.
(ii). Both the parties are restrained from creating any
charge on commercial space of the subject complex by
way of sale, mortgage, lien, lease etc. till further orders."
22. It is clear from the aforesaid order that other reliefs sought by
RCPL including the appointment of a forensic auditor; removal of
alleged encroachment; and directions to provide documents, were not
granted at that stage.
23. The controversy at that stage related to the directions regarding
stay of commercial space. The Arbitral Tribunal had restrained both the
parties (HCBS and RCPL) from selling, transferring or encumbering
the commercial space as the exercise to demarcate the space with
respect to share allocation of the respective parties had not been carried
out. In addition, there was also a dispute whether RCPL is entitled to
14% of the total commercial space as contended by HCBS or 27% as
claimed by RCPL.
24. RCPL did not prefer any appeal against the order dated
10.07.2021 passed by the Arbitral Tribunal. However, HCBS being
aggrieved by the Arbitral Tribunal's direction restraining it from selling
or dealing with the commercial space, filed an appeal under Section
37(2)(b) of the A&C Act [ARB.A.(COMM)43/2021].
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Digitally Signed
By:Dushyant Rawal
25. In the said appeal, it was contended by HCBS that it could not
be interdicted from selling any part of the commercial space as RCPL's
share was limited to 14%. However, RCPL had claimed 27% of the total
commercial space. Thus, in any event transactions in respect of not
more than 27% of the total commercial space could be interdicted.
HCBS made a concession allowing RCPL to demarcate 27% of the total
commercial space (except that area, which had already been sold) as
that would address any controversy regarding lack of mutual agreement
for allocation of any commercial space amongst the parties. Since
HCBS had also accepted that 27% of the total commercial space as
earmarked by RCPL would not be dealt with, the dispute as to whether
RCPL's share was 14% of the total space or 27% was rendered
irrelevant at the interim stage. Since these were the only reasons that
persuaded the Arbitral Tribunal to interdict sale of any part of the
commercial space in terms of the order dated 10.07.2021, the interim
order granted by the Arbitral Tribunal required to be modified
accordingly. However, at that stage, the learned counsel appearing for
RCPL submitted that there were certain other grounds, which were not
stated in the order dated 10.07.2021 that had persuaded the Arbitral
Tribunal to grant a blanket order restraining the parties from selling the
commercial space. In view of the statement, this Court set aside the
order dated 10.07.2021 to the limited extent that the Arbitral Tribunal
had interdicted any transaction in relation to the commercial space in
access of 27% of the total commercial space and remanded the matter
to the Arbitral Tribunal to consider afresh after taking into account the
concession made by HCBS.
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Digitally Signed
By:Dushyant Rawal
26. The order dated 08.09.2021 passed by this Court in Arb.
A.(Comm) 43/2021 is set out below:
1. The appellant (hereinafter 'HCBS') has filed the
present appeal impugning an order dated 10.07.2021
passed by the Arbitral Tribunal. HCBS further prays
that the said order be modified to the extent that both
the parties be restrained from creating any charge on
14% of the commercial space or in the alternate that
the parties be restrained from creating any charge on
27% of the commercial space chosen by the respondent
(hereinafter 'RCPL').
2. The parties had entered into a Collaboration
Agreement dated 11.06.2013 whereby HCBS had
agreed to develop the land owned by RCPL in
accordance with the Affordable Group Housing Policy,
which was expected to be notified at the material time.
It is admitted that in terms of the Collaboration
Agreement, the parties agreed that certain land owned
by RCPL would be developed by HCBS. Such
development would be in two parts; one a residential
complex and the other a commercial space. The
controversy in the present appeal is limited to the
sharing of the commercial space.
3. The Arbitral Tribunal had restrained the parties
from dealing with the commercial space in any manner
on the ground that the parties had not allocated the
specific space amongst themselves. In addition, there
was also a dispute as to whether RCPL is entitled to
14% of the commercial space or 27% of the same. The
relevant extract of the impugned order that notes the
aforesaid controversies is set out below:
"11. Learned counsel for the respondent has also
submitted that while obtaining the ex parte
interim order under Section 9 of the 1996 Act,
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the claimant has suppressed from the Court that
so far as commercial portion of the project is
concerned, it was to be shared between the
parties in the ratio of 14 : 86 between the
claimant and the respondent and as a result
obtained undue advantage on the basis of
sharing agreement pertaining to the residential
portion which is in the ratio of 27 : 73.
13. Learned counsel for the respondent has
referred to clause 16 of the Development
Agreement and contended that on perusal of the
said clause, it is clear that commercial space in
the complex was to be shared between the
parties in the ratio of 14 : 86. Therefore, the ex
parte order dated 25.01.201 passed by the
Hon'ble High Court of Delhi directing the
respondent to ensure that amounts paid by the
allottees of the housing unit is detrimental and
unjust qua the respondent because as per the
Escrow agreement, the amount credited into the
relevant account held with YES Bank is
automatically transferred to the accounts of the
claimant and respondent in the ratio of 28 : 72
[Sic rect 27:73].
14. On the contrary, learned counsel for the
claimant has contended that sharing of the
claimant in commercial FAR was agreed to be
reduced from 27% to 14% owing to
representation of the respondent that he would
maintain project free of cost "for a period of five
years from the date of completion of the project"
which is reflected from the conjoint reading of
clause 5 and clause 16 of the Development
Agreement. It is contended that respondent,
however, has charged meter charges, security
deposit, cess, interest free maintenance security,
common area maintenance charges and
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electricity consumption charges from the
allottees, which not only includes common area
maintenance charges but also "IFMS" and other
maintenance related charges. Thus, there can be
no doubt that respondent is not entitled to the
concession given regarding commercial FAR by
reducing the claimant's share from 27% to 14%.
15. The above dispute regarding claimant's share
of FAR of commercial space relates to the merit
of the case and I do not find it advisable to dwell
on the same at this initial stage."
4. HCBS states that it has no objection if RCPL
earmarks 27% of the total commercial space (except
the area that has already been sold) and, the said
commercial space is preserved till the disputes are
decided. It is contended on behalf of HCBS that there
is no ground to restrain HCBS from dealing with its
share of the commercial space. The controversy as to
the lack of mutual agreement regarding allocation of a
particular commercial space would not survive in view
of HCBS's decision to yield to the demarcation as
made by RCPL.
5. This Court is, prima facie, of the view that in view
of the concession made by HCBS permitting RCPL to
demarcate the commercial space that it would claim as
part of its share, the question that the parties have not
been able to arrive at a mutual agreement regarding the
same, can no longer be a ground for restraining HCBS
from entering into any transaction in respect of the
commercial space falling to its share.
6. Mr Sharma, learned counsel appearing for RCPL
has also stated, on instructions, that RCPL would be
willing for modification of the impugned order subject
to the condition that RCPL be joined as a signatory to
any agreement relating to the sale of the commercial
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By:Dushyant Rawal
space that falls to the share of HCBS. HCBS is not
agreeable to the same. This Court is also of the view
that such a condition is clearly unreasonable as
RCPL's interest in the commercial space is limited to
its allocation. Once HCBS is willing to earmark
sufficient space to satisfy RCPL's claim with regard to
the commercial space, if RCPL succeeds before the
Arbitral Tribunal, there appears to be no reason for
RCPL to join as a signatory to such agreements.
7. The learned counsel appearing for RCPL now
states that there are other grounds as well on which the
sale of the commercial space is required to be
interdicted. Although the Arbitral Tribunal had not
specifically dealt with the same, it is contended that the
Arbitral Tribunal had passed the impugned direction
interdicting the parties from dealing with the
commercial space keeping the aforesaid grounds in
mind. This Court does not find much strength in the
aforesaid contention. Nonetheless, since it is
contended that there are other unstated grounds on
which the Arbitral Tribunal had interdicted the parties
form dealing with the commercial space in the project
in question, this Court considers it apposite that the
said contentions be considered by the Arbitral Tribunal
in the first instance.
8. Accordingly, this Court sets aside the impugned
order to the extent that it interdicts the parties from
dealing with the commercial space in the project and
remands the matter to the Arbitral Tribunal to consider
afresh after taking into account the concession made by
the HCBS in these proceedings.
9. The appeal is disposed of in the aforesaid terms."
27. Before the Arbitral Tribunal, RCPL contended that HCBS was
suffering a financial crunch and if it was permitted to dispose of the
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commercial area, it would frustrate RCPL's claim, which was
approximately ₹25 crores and the said claim could increase further on
conciliation of accounts. RCPL further alleged that the plans regarding
the commercial space had been changed by the promoter of HCBS (Mr
Bhupinder Singh) by submitting forged documents before the
Department of Town and Country Planning, Haryana.
28. The Arbitral Tribunal considered the rival contentions and
concluded that "blanket stay order in relation to the commercial space
would be unjust because it would block the source of revenue to the
respondent (HCBS) resulting in the financial crunch and irreparable
loss to the respondent (HCBS)".
29. Insofar as RCPL's contention that HCBS was required to be
restrained from transferring or creating any charge of any portion of the
residential premises or that the change of plans had been obtained by
forgery, the Arbitral Tribunal held as under:
"31. I do not find merit in the above plea. The claimant
has not been able to convince me as to on what basis,
he is apprehensive that his financial interest would be
defeated if the restraint order is not passed against the
respondent particularly when he has not shown me any
material indicating that the respondent is diverting the
revenue received in respect of the project in order to
defeat the interest of claimant. As regards the plea that
respondent has managed to get change in the plan of
the commercial space on the basis of forged document,
it is suffice to say that aforesaid plea relates to the
merits of the case which requires evidence for
determination and at this stage said plea cannot be
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made basis for restraining the respondent from selling
the commercial space."
30. It is apparent from the above that RCPL has sought to re-agitate
its prayer for seeking a blanket stay for the commercial space on more
than one occasion. In the first instance, it sought to secure an ex parte
order in its petition filed under Section 9 of the A&C Act, however, no
such interim order was passed and the parties were relegated to seek
their relief before the Arbitral Tribunal. Before the Arbitral Tribunal,
RCPL sought a blanket stay on the sale of commercial space on the
ground that there was no mutual agreement regarding demarcation of
the space falling to its share and further that its share was not 14% of
the total commercial space but 27%. RCPL was successful in securing
a blanket order on that ground. This Court considered contentions in
this regard in the appeal filed by HCBS [being Arb. A. (COMM,)
43/2021] and found that both the aforesaid grounds were addressed by
the concession granted by HCBS and therefore, a blanket stay order
restraining HCBS from selling the commercial space falling to its share,
was not sustainable. However, at that stage, it was contended on behalf
of RCPL that there were some unstated grounds, which it persuaded
before the Arbitral Tribunal to pass the interim order and therefore, the
matter was remanded to the Arbitral Tribunal. It is clear from the
impugned order that there was no unstated ground on behalf of RCPL
before this Court in Arb. A. (COMM.) 43/2021 and RCPL merely
wanted to re-agitate the issues for interim relief, which ought to have
been settled at that stage.
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31. HCBS has, at various stages, expressed its grievance that the
object of RCPL is to somehow delay the arbitral proceedings. Prima
facie, the said contention appears merited.
32. It is relevant to note that RCPL had filed its Statement of Claims
but has termed it as 'Preliminary Arbitration Claim'. Presumably,
RCPL seeks to reserve its right to file further claims or amend its claims.
It would be virtually impossible for an Arbitral Tribunal to complete the
arbitral proceedings, in view of the conduct of the RCPL to delay
completion of the pleadings.
33. The second ground on which RCPL has assailed the impugned
order is that the Arbitral Tribunal has rejected its application dated
03.08.2021 for directions to be passed to HCBS to provide certain
documents.
34. RCPL had sought reconciliation of accounts and other
documents to ascertain the revenue generated by HCBS. The Arbitral
Tribunal had directed the parties to jointly reconcile the accounts.
Admittedly, the representatives of RCPL had visited the office of HCBS
and certain accounts had been shared with the said representatives.
RCPL alleges that during the reconciliation, HCBS had shown a ledger
maintained in Tally (an accounting software). RCPL claims that the
ledger maintained in the said software (Tally) does not reflect the
correct state of affairs and there is another software developed by one
ASG Software Private Limited, which would reflect the correct details.
This is disputed by HCBS. It claims that it had provided all the
necessary details regarding the project to RCPL.
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35. In regard to the aforesaid disputes, the Arbitral Tribunal had
noted that on 05.10.2021, HCBS had provided additional documents
and, prima facie, the necessary information had been supplied to RCPL.
The relevant extract of the impugned order is set out below:
"15. I have considered the submissions made by the
parties. It may be noted that on 05.10.2021, the
respondent filed an additional documents namely, Ledger
Accounts of Cancellation from 01.06.2020 to 24.08.2021,
Complete Occupation Certificate dated 18.03.2020, List
of customers with flat nos., proof of payment of EDC
with ledgers, details and proof of EEC payments, details
of license renewal fees, details of property tax, pen drive
containing entire Tax Returns, Entire Ledger Accounts,
Entire Bank Statements - Password for yes bank
statements - Yes bank escrow account 0419 :
247471701011800, Yes Bank pre escrow account 3755 :
202898801011800, Yes bank account 4113 :
238998201011800.
16. On perusal of the above and the documents
earlier shown to the claimant during exercise of
reconciliation, it prima facie appears that necessary
information has already been supplied to the claimant and
the claimant is not justified in seeking information in the
format convenient to him. Otherwise also, perusal of the
claim statement filed by the claimant would reveal that
first prayer of the claimant is for the rendition of
accounts. The documents sought to be produced vide this
application are also in the nature of seeking the accounts
from the respondent, which prayer in my view cannot be
granted at this initial stage as such an order would amount
to allowing the prayer of rendition of accounts even
before the recording of evidence, which is not permissible
under law. In view of the discussion above, I do not find
any merit in the application. It is accordingly dismissed."
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36. According to RCPL, the Arbitral Tribunal's conclusion in this
regard is erroneous and the necessary documents have not been
provided to RCPL.
37. It is seen from the above that the controversy sought to be raised
by RCPL is regarding the discovery of documents and data. It is
doubtful whether the procedural orders passed by the Arbitral Tribunal
fall within the scope of interim measures of protection under Section 17
of the A&C Act. Indisputably, RCPL has sought the relief of rendition
of accounts and therefore, the conclusion of the Arbitral Tribunal that
grant of any further prayers at the interim stage without considering the
evidence that may be led by the parties, would not be apposite.
38. In terms of Section 5 of the A&C Act, the scope of judicial
intervention is limited and as is specifically provided under the A&C
Act. There is no provision in the A&C Act permitting recourse to courts
in respect of procedural orders.
39. It is material to note that the Arbitral Tribunal was constituted
by an order dated 25.03.2021 and almost ten months have passed.
However, RCPL has not yet filed its final Statement of Claims.
40. This Court is of the view that the contentions advanced by RCPL
in the present appeal are not substantial and RCPL has unjustifiably
imposed on judicial time.
41. In view of the above, the present appeal is dismissed with costs
quantified at ₹25,000/-. The costs shall be deposited with the Delhi High
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Court Legal Services Committee within a period of two weeks from
date.
42. The pending application is also disposed of.
VIBHU BAKHRU, J
FEBRUARY 16, 2022
RK/v
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