Kerala High Court
M/S. Dlf Home Developers Ltd vs Samuel V Thomas on 31 May, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
ARB.A NO. 23 OF 2020
AGAINST THE ORDER DATED 22.1.2020 IN O.P.(ARB)NO.287/2018 OF
THE COURT OF ADDITIONAL DISTRICT JUDGE-VII, ERNAKULAM.
APPELLANT/PETITIONER:
M/S.DLF HOME DEVELOPERS LTD.
0
HAVING ITS REGISTERED OFFICE AT 9TH FLOOR, DLF
CENTRE, SANSAD MARG, NEW DELHI - 110 001 AND
HAVING ITS REGIONAL OFFICE OPP. DOORDARSHAN KENDRA
SEAPORT AIRPORT ROAD, KAKKANAD, COCHIN - 682 030
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR.SAYED EBRAHIM.
BY ADV M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
RESPONDENT/RESPONDENT:
MARTIN GEORGE
0
HO 5/818, RAJA NAGAR, POYAMPALAYAM, P.N.ROAD,
TRIPUR, TAMIL NADU - 641 603.
BY ADV SRI.PEEYUS A.KOTTAM
THIS ARBITRATION APPEAL HAVING BEEN FINALLY HEARD ON
31.05.2021, ALONG WITH Arb.A.26/2020 AND CONNECTED CASES,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Arb.Appeal No.23 of 2020 & Conn. cases 2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
ARB.A NO. 26 OF 2020
AGAINST THE ORDER DATED 16.1.2020 IN O.P.(ARB)NO.264/2018 OF
THE COURT OF THE II ADDITIONAL DISTRICT JUDGE,ERNAKULAM,
APPELLANT/PETITIONER:
M/S DLF HOME DEVELOPERS LTD.
0
HAVING ITS REGISTERED OFFICE AT 9TH FLOOR
DLF CENTRE, SANSAD MARG, NEW DELHI- 110001 AND
HAVING ITS REGIONAL OFFICE OPP. DOORDARSHAN KENDRA
SEAPORT AIRPORT ROAD, KAKKANAD, COCHIN- 682030
REPRESENTED BY ITS AUTHORISED SIGNATORY,
MR.SAYED EBRAHIM.
BY ADVS.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
RESPONDENT/RESPONDENT:
ACHUTHAN SUNDARESWARAN
0
AGE NOT KNOWN TO THE APPELLANT S/O.KANDAN KANIYATH
ACHUTHAN, SUNDER VILLA, 20/598 PULICODE,
MUTTIKULANGARA P.O., PALAKKAD- 678594
BY ADV SRI.PEEYUS A.KOTTAM
THIS ARBITRATION APPEAL HAVING BEEN FINALLY HEARD ON
31.05.2021, ALONG WITH Arb.A.23/2020 AND CONNECTED CASES,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Arb.Appeal No.23 of 2020 & Conn. cases 3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
ARB.A NO. 31 OF 2020
AGAINST THE ORDER DATED 16.1.2020 IN O.P.(ARB)263/2018 OF
THE COURT OF II ADDITIONAL DISTRICT JUDGE,ERNAKULAM,
APPELLANT/PETITIONER:
M/S DLF HOME DEVELOPERS LTD. HAVING ITS REGISTERED
0
OFFICE AT 9TH FLOOR DLF CENTRE, SANSAD MARG,
NEW DELHI-110 001, AND HAVING ITS REGIONAL OFFICE
OPP. DOORDARSHAN KENDRA SEAPORT AIRPORT ROAD,
KAKKANAD, COCHIN-682 030, REPRESENTED BY ITS
AUTHORISED SIGNATORY MR.SAYED EBRAHIM.
BY ADVS.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
RESPONDENT/RESPONDENT:
ACHUTHAN SUNDARESWARAN,
0
S/O.KANDAN KANIYATH ACHUTHAN, SUNDER VILLA,
20/598,PULICODE, MUTTIKULANGARA P.O.,
PALAKKAD-678 594
BY ADVS.SRI.PEEYUS A.KOTTAM
SHRI.HRITHWIK D. NAMBOOTHIRI
THIS ARBITRATION APPEAL HAVING BEEN FINALLY HEARD ON
31.05.2021, ALONG WITH Arb.A.23/2020 AND CONNECTED CASES,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Arb.Appeal No.23 of 2020 & Conn. cases 4
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
ARB.A NO. 6 OF 2021
AGAINST THE ORDER IN O.P.(ARB)273/2018 DATED 20.12.2019
OF THE COURT OF ADDITIONAL DISTRICT JUDGE - VII, ERNAKULAM,
APPELLANT/PETITIONER:
M/S. DLF HOME DEVELOPERS LTD.HAVING ITS REGISTERED
0
OFFICE AT 9TH FLOOR, DLF CENTRE, SANSAD MARG,
NEW DELHI-110 001, AND HAVINF ITS REGIONAL OFFICE
OPP.DOORDARSHAN KENDRA, SEAPORT AIRPORT ROAD,
KAKKANAD, COCHIN-682 030, REPRESENTED BY ITS
AUTHORISED SIGNATORY, MR.SAYED EBRAHIM
BY ADVS.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
SHRI.DOMINIC ANTONY
RESPONDENT/RESPONDENT:
SAMUEL V THOMAS, S/O.V.CHERIYAN THOMAS,
0
VADAKKATHARA HOUSE, ETTICHUVADU P.O., RANNI,
PATHANAMTHITTA-689 672.
BY ADVS.SRI.SAIBY JOSE KIDANGOOR (CAVEATOR)
SRI.SAIBY JOSE KIDANGOOR
SRI.BENNY ANTONY PAREL
THIS ARBITRATION APPEAL HAVING BEEN FINALLY HEARD ON
31.05.2021, ALONG WITH Arb.A.23/2020 AND CONNECTED CASES,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Arb.Appeal No.23 of 2020 & Conn. cases 5
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
ARB.A NO. 7 OF 2021
AGAINST THE ORDER DATED 20.12.2019 IN O.P(ARB)254/2018 OF
THE COURT OF ADDITIONAL DISTRICT JUDGE - VII, ERNAKULAM,
APPELLANT/PETITIONER:
M/S.DLF HOME DEVELOPERS LTD.
0
HAVING ITS REGISTERED OFFICE AT 9TH FLOOR,
DLF CENTRE, SANSAD MARG, NEW DELHI-110001 AND
HAVING ITS REGIONAL OFFICE OPP. DOORDARSHAN
KENDRA, SEAPORT AIRPORT ROAD, KAKKANAD, COCHIN-
682030, REPRESENTED BY ITS AUTHORISED SIGNATORY,
MR.SAYED EBRAHIM.
BY ADVS.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
SHRI.DOMINIC ANTONY
RESPONDENT/RESPONDENT:
TONO THOMAS, S/O. THOMAS MATHEW, 12A, EXPRESS
0
ESTATE, KALOOR, COCHIN-682017, PERMANENT ADDRESS
AT VATTAKUZHI HOUSE, CHEMBUMUKKU, CIVIL LANES
ROAD, COCHIN-682030.
BY ADV SRI.PEEYUS A.KOTTAM
THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON
31.05.2021, ALONG WITH Arb.A.23/2020 AND CONNECTED CASES,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Arb.Appeal No.23 of 2020 & Conn. cases 6
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
ARB.A NO. 8 OF 2021
AGAINST THE ORDER 20.12.2019 IN O.P(ARB) 267/2018 OF THE
COURT OF ADDITIONAL DISTRICT JUDGE - VII, ERNAKULAM,
APPELLANT/PETITIONER:
M/S. DLF HOME DEVELOPERS LTD.,
0
HAVING ITS REGISTERED OFFICE AT 9TH FLOOR
DLF CENTRE, SANSAD MARG, NEW DELHI - 110 001
AND HAVING ITS REGIONAL OFFICE OPP. DOORDARSHAN
KENDRA SEAPORT AIRPORT ROAD,
KAKKANAD, COCHIN - 682 030
REPRESENTED BY ITS AUTHORISED SIGNATORY,
MR.SAYED EBRAHIM.
BY ADVS.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SRI.PAULOSE C. ABRAHAM
SRI.RAJA KANNAN
SHRI.DOMINIC ANTONY
RESPONDENT/RESPONDENT:
1 ANTO THOMAS, S/O.SRI.THOMAS V.CHIRAYIL,
CHAKUNGAL HOUSE, BANK ROAD,
NEAR STATE BANK OF INDIA,
VYTILLA, KOCHI - 682019.
Arb.Appeal No.23 of 2020 & Conn. cases 7
2 KAVITHA JOSEPH, W/O.ANTO THOMAS,
CHAKUNGAL HOUSE, BANK ROAD,
NEAR STATE BANK OF INDIA,
VYTILLA, KOCHI - 682 019.
BY ADVS.SRI.SAIBY JOSE KIDANGOOR(caveator)
SRI.SAIBY JOSE KIDANGOOR
SRI.BENNY ANTONY PAREL
THIS ARBITRATION APPEAL HAVING BEEN FINALLY ON 31.05.2021,
ALONG WITH Arb.A.23/2020 AND CONNECTED CASES, THE COURT ON
THE SAME DAY DELIVERED THE FOLLOWING:
Arb.Appeal No.23 of 2020 & Conn. cases 8
"C.R."
JUDGMENT
Ravikumar, J.
The same appellant viz., M/s.DLF Home Developers Ltd.,
filed the captioned appeals under Section 37 of the Arbitration and
Conciliation Act, 1996, hereafter referred for brevity 'the Act' only,
against different orders of dismissal passed in Original Petitions
(Arbitration) filed by it under Section 34 of the Act on being aggrieved
by different arbitral awards passed in favour of the respective
respondent in the appeals. M/s.DLF Home Developers Ltd. and the
respective respondent in each of the appeals had entered into
agreements, on different dates styled as the Apartment Buyers
Agreement for the purpose of purchase of apartments in the then
proposed project of the appellant by name "DLF Riverside". At the
request of the parties and also taking note of the commonness of the
issues as also the contentions the appeals were jointly heard and they
are being disposed of by this common judgment. For a proper disposal
of the appeals we think it appropriate to make a succinct narration of
the relevant factual aspects involved in each of the appeals.
Arb.Appeal No.23 of 2020
2. This appeal is filed against the order dated 22.1.2020
in O.P.(Arb)No.287 of 2018 of the Court of the Additional District
Arb.Appeal No.23 of 2020 & Conn. cases 9
Judge-VII, Ernakulam. The respondent-claimant initially booked
Apartment No.RSC-083 as per agreement dated 1.2.2008, in DLF
Riverside Project. On acceptance of the announced scheme for
upgrading to a larger apartment and pursuant to the execution of
'Apartment Buyers Agreement' with the appellant on 7.1.2009 the
respondent was, later, allotted Apartment No.RSC-062, on the 6 th floor
of Tower-C. Even after execution of the said agreement, 1.2.2008,
which is the date of the agreement in relation to Apartment No.RSC-
083 initially booked by him, was mutually agreed as the date of the
agreement. The respondent effected a total payment of
Rs.1,26,19,660.89. The total cost of the newly allotted apartment, of
course, to be handed over on completion of the construction, was
informed as Rs.1,32,85,731.49 inclusive of the cost of two car parking
spaces. According to the respondent, the apartment was to be fully
built, complete with all facilities, amenities and services and with all
statutory approvals and clearances etc., by 1.9.2010, but it was not
handed over, as agreed, even by 15.9.2015. Hence, raising aforesaid
contentions, the respondent in this appeal filed claim, numbered as
Arbitration Case No.8/2015, on 15.9.2015 for a sum of
Rs.1,26,19,660.89 claiming to be the sum total paid for the purchase of
Apartment No.RSC-062. In addition, he claimed an amount of
Rs.1,53,75,210/- towards interest computed at the rate of 18% per
Arb.Appeal No.23 of 2020 & Conn. cases 10
annum on the principal amount from the respective dates of each
payment till the date of claim petition. He also claimed interest at the
rate of 18% per annum on the principal amount of Rs.1,26,19,660.89
from the date of claim petition till the date of award. He claimed an
amount of Rs.1 Crore as damages and also claimed future interest from
the date of award at the rate of 18% per annum till realisation. The sole
Arbitrator passed an award on 1.8.2018, upon considering the evidence
on record as also the rival contentions, partly allowing the claim petition
and awarding a sum of Rs.2,32,88,271.47 (Rupees Two Crores Thirty
Two Lakhs Eighty Eight Thousand Two Hundred and Seventy One and
Forty Seven Paise only). The respondent-claimant was also held
entitled to claim future interest on the principal amount paid viz.,
Rs.1,26,19,660.89, at the rate of 9% per annum till recovery.
Arb.Appeal No.26 of 2020
3. This appeal is filed against the order dated 16.1.2020 in
O.P.(Arb)No.264 of 2018 of the Court of the Additional District Judge-II,
Ernakulam. The respondent-claimant booked a Duplex Apartment (RSE-
122) in DLF Riverside Project of the appellant. The total cost of the
apartment allotted and, of course, to be handed over on completion of
construction, was Rs.1,48,10,475/- inclusive of the cost of two car
parking spaces. He paid a sum of Rs.1,41,30,524.61, towards the cost
of the apartment allotted to him. As per the Apartment Buyers
Arb.Appeal No.23 of 2020 & Conn. cases 11
Agreement dated 31.1.2008, the apartment was to be fully built,
complete with all facilities, amenities and services and with all statutory
approvals and clearances etc., by 31.8.2010, but it was not handed
over, as agreed, even by 1.9.2015. Hence, the respondent in this
appeal filed claim, numbered as Arbitration Case No.15A/2015, on
1.9.2015 for a sum of Rs.1,41,30,524.61 claiming to be the sum total
paid for the purchase of Apartment No.RSE-122. In addition, he
claimed an amount of Rs.1,96,47,873.59 towards interest computed at
the rate of 18% per annum on the principal amount from the respective
dates of each payment till the date of claim petition. He also claimed
interest at the rate of 18% on the principal amount of
Rs.1,41,30,524.61 from the date of claim petition till the date of award.
He claimed an amount of Rs.50,00,000/-as damages and also claimed
future interest from the date of award at the rate of 18% per annum till
realisation. The sole Arbitrator passed an award on 16.7.2018, upon
considering the evidence on record as also the rival contentions, partly
allowing the claim petition and awarding a sum of Rs.2,60,11,803.24
(Rupees Two Crores Sixty Lakhs Eleven Thousand Eight Hundred and
Three and Twenty Four Paise only). The respondent-claimant was also
held entitled to claim future interest on the principal amount paid viz.,
Rs.1,41,25,664.26 at the rate of 9% per annum till recovery.
Arb.Appeal No.23 of 2020 & Conn. cases 12
Arb.Appeal No.31 of 2020
4. This appeal is filed against the order dated 16.1.2020 in
O.P.(Arb)No.263 of 2018 of the Court of the Additional District Judge-II,
Ernakulam. The respondent-claimant booked a Duplex Apartment
(RSE-061) in DLF Riverside Project of the appellant. The total cost of
the apartment was Rs.2,18,29,660/- inclusive of the cost of two car
parking spaces. He paid a sum of Rs.2,10,24,512.31, towards the cost
of the apartment allotted to him and to be handed over on completion
of construction. As per the Apartment Buyers Agreement dated
30.1.2008, the apartment was to be fully built, complete with all
facilities, amenities and services and with all statutory approvals and
clearances etc., by 30.8.2010, but it was not handed over, as agreed,
even by 22.9.2015. Hence, the respondent in this appeal filed claim,
numbered as Arbitration Case No.15/2015 on 22.9.2015 for a sum of
Rs. 2,10,24,512.31 claiming to be the sum total paid for the purchase
of the Apartment No.RSE-061. In addition, he claimed an amount of
Rs.2,85,31,506.47 towards interest computed at the rate of 18% per
annum on the principal amount from the respective dates of each
payment till the date of claim petition. He also claimed interest at the
rate of 18% on the principal amount of Rs.2,10,24,512.31 from the
date of claim petition till the date of award. He claimed an amount of
Rs.50,00,000/- as damages and also claimed future interest from the
Arb.Appeal No.23 of 2020 & Conn. cases 13
date of award at the rate of 18% per annum till realisation. The sole
Arbitrator passed an award on 16.7.2018, upon considering the
evidence on record as also the rival contentions, partly allowing the
claim petition and awarding a sum of Rs.3,82,54,276.67 (Rupees Three
Crores Eighty Two Lakhs Fifty Four Thousand Two Hundred and Seventy
Six and Sixty Seven Paise only). The respondent-claimant was also
held entitled to claim future interest on the principal amount paid viz.,
Rs.2,08,13,429.31 at the rate of 9% per annum till recovery.
Arb.Appeal No.6 of 2021
5. This appeal is filed against the order dated 20.12.2019 in
O.P.(Arb)No.273 of 2018 of the Court of the Additional District Judge-
VII, Ernakulam. The respondent-claimant booked a Duplex Apartment
(RSC-054) in DLF Riverside Project of the appellant. The total cost of
the apartment was informed as Rs.80,19,750/- inclusive of the cost of
two car parking spaces. He paid a sum of Rs.76,02,768/- towards the
cost of the apartment allotted to him. As per the Apartment Buyers
Agreement dated 7.8.2008, the apartment was to be fully built,
complete with all facilities, amenities and services and with all statutory
approvals and clearances etc., by 7.3.2011, but it was not handed over,
as agreed, even by 21.8.2015. Hence, the respondent in this appeal
filed claim, numbered as Arbitration Case No.12/2015 on 21.8.2015 for
a sum of Rs.76,02,768/- claiming to be the sum total paid for the
Arb.Appeal No.23 of 2020 & Conn. cases 14
purchase of the Apartment No.RSC-054. In addition, he claimed an
amount of Rs.82,15,688.59 towards interest computed at the rate of
18% per annum on the principal amount from the respective dates of
each payment till the date of claim petition. He also claimed interest at
the rate of 18% on the principal amount of Rs.76,02,768/- from the
date of claim petition till the date of award. He claimed an amount of
Rs.25,00,000/- as damages and also claimed future interest from the
date of award at the rate of 18% per annum till realisation. The sole
Arbitrator passed an award on 23.7.2018, upon considering the
evidence on record as also the rival contentions, partly allowing the
claim petition and awarding a sum of Rs.1,35,90,891.38 (Rupees One
Crore Thirty Five Lakhs Ninety Thousand Eight Hundred and Ninety One
and Thirty Eight Paise only). The respondent-claimant was also held
entitled to claim future interest on the principal amount paid viz.,
Rs.76,02,768/- at the rate of 9% per annum till recovery.
Arb.Appeal No.7 of 2021
6. This appeal is filed against the order dated 20.12.2019 in
O.P.(Arb)No.254 of 2018 of the Court of the Additional District Judge-
VII, Ernakulam. The respondent-claimant booked a Duplex Apartment
(RSB-061) in DLF Riverside Project of the appellant. The total cost of
the apartment was Rs.2,19,03,475/- inclusive of the cost of two car
parking spaces. He paid a sum of Rs.1,86,17,954.50 towards the cost
Arb.Appeal No.23 of 2020 & Conn. cases 15
of the apartment allotted to him. As per the Apartment Buyers
Agreement dated 1.2.2008, the apartment was to be fully built,
complete with all facilities, amenities and services and with all statutory
approvals and clearances etc., by 1.8.2010, but it was not handed over,
as agreed, even by 1.9.2015. Hence, the respondent in this appeal
filed claim, numbered as Arbitration Case No.1/2015 on 1.9.2015 for a
sum of Rs.1,86,17,954.50 claiming to be the sum total paid for the
purchase of the Apartment No.RSB-061. In addition, he claimed an
amount of Rs.2,29,43,841.22 towards interest computed at the rate of
18% per annum on the principal amount from the respective dates of
each payment till the date of claim petition. He also claimed interest at
the rate of 18% on the principal amount of Rs.1,86,17,954.50 from the
date of claim petition till the date of award. He claimed an amount of
Rs.50,00,000/- as damages and also future interest from the date of
award at the rate of 18% per annum till realisation. The sole Arbitrator
passed an award on 6.7.2018, upon considering the evidence on record
as also the rival contentions, partly allowing the claim petition and
awarding a sum of Rs.3,45,29,652.80 (Rupees Three Crores Forty Five
Lakhs Twenty Nine Thousand Six Hundred and Fifty Two and Eighty
Paise only). The respondent-claimant was also held entitled to claim
future interest on the principal amount paid viz., Rs.1,86,17,954.50 at
the rate of 9% per annum till recovery.
Arb.Appeal No.23 of 2020 & Conn. cases 16
Arb.Appeal No.8 of 2021
7. This appeal is filed against the order dated 20.12.2019 in
O.P.(Arb)No.267 of 2018 of the Court of the Additional District Judge-
VII, Ernakulam. The respondent-claimant booked a Duplex Apartment
(RSA-061) in DLF Riverside Project of the appellant. The total cost of
the apartment was Rs.1,65,96,000/- inclusive of the cost of two car
parking spaces. He paid a sum of Rs.1,58,22,189.60 towards the cost
of the apartment allotted to him. As per the Apartment Buyers
Agreement dated 5.3.2008, the apartment was to be fully built,
complete with all facilities, amenities and services and with all statutory
approvals and clearances etc., by 18.11.2010, but it was not handed
over, as agreed, even by 1.8.2015. Hence, the respondent in this
appeal filed claim, numbered as Arbitration Case No.19/2015 on
1.8.2015 for a sum of Rs.1,58,22,189.60 claiming to be the sum total
paid for the purchase of the Apartment No.RSA-061. In addition, he
claimed an amount of Rs.1,80,60,658.14 towards interest computed at
the rate of 18% per annum on the principal amount from the respective
dates of each payment till the date of claim petition. He also claimed
interest at the rate of 18% on the principal amount of
Rs.1,58,22,189.60 from the date of claim petition till the date of award.
He claimed an amount of Rs.50,00,000/- as damages and also claimed
future interest from the date of award at the rate of 18% per annum till
Arb.Appeal No.23 of 2020 & Conn. cases 17
realisation. The sole Arbitrator passed an award on 16.7.2018, upon
considering the evidence on record as also the rival contentions, partly
allowing the claim petition and awarding a sum of Rs.2,87,57,850.76
(Rupees Two Crores Eighty Seven Lakhs Fifty Seven Thousand Eight
Hundred and Fifty and Seventy Six Paise only). The respondent-
claimant was also held entitled to claim future interest on the principal
amount paid viz., Rs.1,58,16,614.13 at the rate of 9% per annum till
recovery.
8. Heard.
9. Common contentions were raised in the defence
statement submitted by the appellant herein in all the aforementioned
Arbitration Cases, before the Arbitrator as also in the petitions filed
under Section 34 of the Act for setting aside the award passed in the
respective Arbitration Cases. So also, in all these appeals similar
contentions, on identical facts, are raised. As stated earlier, it is in the
aforesaid circumstances that joint hearing of the appeals was sought
for. Such common contentions raised by M/s.DLF Home Developers
Ltd.,-the appellant would undoubtedly reveal that the delay occurred in
delivering the apartments to the respondent concerned in these
appeals, is not disputed by the appellant. In fact, it is indisputable in
view of the admitted factual position, discernible from the pleadings.
Obviously, in all these appeals, the appellant would contend that it was
Arb.Appeal No.23 of 2020 & Conn. cases 18
prevented from handing over the apartment due to 'force majeure'
conditions. In that regard it was contended that as per Clause 36 of
the 'Apartment Buyers Agreement' executed between the appellant and
the respondent concerned, if the appellant is prevented from handing
over possession of the apartment due to 'force majeure' conditions the
appellant could not be held responsible or liable for not performing any
of its obligations as provided in the agreement. In elaboration of the
said contention the appellant would also contend that when the
apartment was completed and was ready to occupy, a local resident
filed a writ petition viz., W.P.(C)No.27248 of 2012 before this Court
seeking demolition of the apartment complex by name 'DLF Riverside'
and the High Court had granted an interim order of injunction against
the Corporation of Kochi for granting occupation certificate. Further it
is contended thus:-
As per judgment dated 8.12.2014 in W.P.(C)No.27248 of 2012 a
learned Single Judge of this Court ordered for demolition of the said
apartment complex by name 'DLF Riverside' and thereupon the
appellant took up the matter in appeal as W.A.No.1987/2014. The
Division Bench initially granted a stay of the operation of the judgment
and ultimately the judgment dated 8.12.2014 was set aside by the
Division Bench though the findings of the Single Bench regarding the
Building Rules violations were upheld and then the Division Bench
Arb.Appeal No.23 of 2020 & Conn. cases 19
directed the appellant herein to pay a fine of Rs.1 Crore to the District
Collector, Ernakulam for being used exclusively for building up
environment, maintaining ecological balance etc. in Chilavannoor river.
Earlier, in view of the judgment of the Single Bench in W.P.
(C)No.27248 of 2012 the Corporation of Kochi refused to grant
occupancy certificates after numbering the apartments and virtually, it
was the said situation that prevented the appellant from delivering the
apartment to the customers including the respondents. That apart, the
appellant relied on Clauses 10.1 to 10.4 of the Apartment Buyers
Agreement to resist the claim of the respondents and to contend that
they would be entitled only to get refund of the amount actually paid
without interest, subject to the other conditions enjoined under the
Apartment Buyers Agreements. It is also contended that the conditions
in the agreement did not entitle the respondents to claim interest. The
contentions raised on the aforesaid lines based on force majeure
conditions and clauses 10.1 to 10.4 of the agreements were rejected by
the sole Arbitrator and in the Arbitration Cases, after considering such
contentions, the District Judge had also rejected such contentions. All
those contentions are reiterated before us and it is contended that it is
the perverse consideration of such contentions by the Arbitrator as also
by the District Court which resulted in adverse arbitral awards and
orders of their confirmation by the Courts. We will consider all the
Arb.Appeal No.23 of 2020 & Conn. cases 20
contentions including such contentions, in accordance with law, after
referring to the scope of jurisdiction to interfere with arbitral awards
under Sections 34 & 37 of the Act, in the light of the binding precedents
on the subject.
10. An appeal is normally heard on questions of fact and on
questions of law. However, an appeal filed under Section 37 of the Act
against an order under Section 34 of the Act refusing to set aside the
award can be heard only on limited grounds. An arbitral award could
be set aside by the Court on one or more of the grounds set forth under
Section 34(2) of the Act. Normally, the award of the Arbitrator is final
and conclusive as long as the Arbitrator had acted within his authority
and according to the principles of fair play. It is not open to the Court to
re-assess the evidence in order to find out whether the Arbitrator had
committed any error or to decide the question of adequacy of evidence
as the Arbitrator appointed by the parties is the sole Judge of the
quantity and quality of evidence when he delivers arbitral award and
therefore, an award based on little evidence or evidence which does not
measure up in quality to a trained legal mind could not be held invalid.
Ordinarily, the Arbitral Tribunal should be the final arbiter of both the
questions of fact and law referred to it. The Court would not be
justified in interfering with an abitral award, merely because in a given
case, the interpretation on the terms of the contract by the Arbitrator,
Arb.Appeal No.23 of 2020 & Conn. cases 21
did not accord with the interpretation which the Court, if it were to
conduct the adjudication at the first instance, would have placed on
such terms of contract. The Court cannot undertake an independent
assessment of the merits of the award and it can only ascertain
whether the power under Section 34 of the Act was exercised in terms
of the provisions under Section 34 of the Act or whether the exercise of
power by the Court under Section 34 has exceeded the scope of the
provision thereunder.
11. We will refer to the various decisions which settled the
aforesaid positions of law. In Hindustan Construction Co. Ltd. v.
Governor of Orissa reported in AIR 1995 SC 2189 the Hon'ble Apex
Court held that the Court while considering the question whether an
arbitral award should be set aside, did not examine the question as an
Appellate Court. In P.R.Shah, Shares & Stock Brokers (P) Ltd. v.
B.H.H.Securities(P) Ltd. reported in (2012) 1 SCC 594, at
paragraph 21 the Apex Court held that a court could not sit in appeal
over the award of an Arbitral Tribunal by re-assessing or re-
appreciating the award and that an award could be challenged only
under the grounds mentioned in Section 34(2) of the Act.
12. As regards test of perversity the decisions of the
Hon'ble Supreme Court in H.B.Gandhi, Excise and Taxation Officer-
cum-Assessing Authority, Karnal v. M/s.Gopi Nath & Sons (1992
Arb.Appeal No.23 of 2020 & Conn. cases 22
Supp (2) SCC 312) and in Kuldeep Singh v. Commr.of Police
[(1999) 2 SCC 10] assume relevance. In paragraph 7 of Gopi Nath's
case the Apex Court held:-
"7. ..... It is, no doubt, true that if a finding of fact is
arrived at by ignoring or excluding relevant material or
by taking into consideration irrelevant material or if
the finding so outrageously defies logic as to suffer
from the vice of irrationality incurring the blame of
being perverse, then, the finding is rendered infirm in
law."
In paragraph 10 of the decision in Kuldeep Singh's case (supra) the
Apex Court held:
"10. A broad distinction has, therefore, to be maintained
between the decisions which are perverse and those
which are not. If a decision is arrived at on no evidence
or evidence which is thoroughly unreliable and no
reasonable person would act upon it, the order would be
perverse. But if there is some evidence is on record
which is acceptable and which could be relied upon,
however compendious it may be, the conclusions would
not be treated as perverse and the findings would not be
interfered with."
13. In the decision in ONGC Ltd. v. Saw Pipes Ltd.,
[(2003) 5 SCC 705] the Apex Court held that the decision of Arbitral
Tribunal must be within the bounds of its jurisdiction conferred under
the Act or the contract and in exercising the jurisdiction the Arbitral
Tribunal could not act in breach of some provision of substantive law or
the provisions of the Act. Therefore, if the award is contrary to the
substantive provisions of law or the provisions of the Act or against the
terms of the contract, it would be patently illegal, which could be
Arb.Appeal No.23 of 2020 & Conn. cases 23
interfered with under Section 34 of the Act. However, such failure of
procedure should be patent affecting the rights of the parties, it was
further held therein.
14. In paragraph 17 of the decision in Associate Builders
v. Delhi Development Authority reported in (2015) 3 SCC 49 the
Apex Court held:
"It will be seen that none of the grounds contained
in sub-section (2)(a) of Section 34 deal with the merits
of the decision rendered by an arbitral award. It is only
when we come to the award being in conflict with the
public policy of India that the merits of an arbitral award
are to be looked into under certain specified
circumstances."
While dealing with the question as to when interference with finding(s)
of fact in an arbitral award is permissible it was held:
"It must clearly be understood that when a court is
applying the "public policy" test to an arbitration
award, it does not act as a court of appeal and
consequently errors of fact cannot be corrected. A
possible view by the arbitrator on facts has
necessarily to pass the muster as the arbitrator is the
ultimate master of the quantity and quality of
evidence to be relied upon when he delivers his
arbitral award. Thus an award based on little
evidence or on evidence which does not measure up
in quality to a trained legal mind would not be held to
be invalid on this score. Once it is found that the
arbitrator's approach is not arbitrary or capricious,
then he is the last word on facts."
As relates interpretation of terms of a contract, after observing about
the third subhead, patent illegality that it is really a contravention of
Section 28(3) of the Arbitration Act and extracting Section 28(3), it
Arb.Appeal No.23 of 2020 & Conn. cases 24
was further held in paragraph 42.3 of the decision in Associate
Builders case thus:-
"This last contravention must be understood with a
caveat. An Arbitral Tribunal must decide in accordance
with the terms of the contract, but if an arbitrator
contrues a term of the contract in a reasonable manner,
it will not mean that the award can be set aside on this
ground. Construction of the terms of a contract is
primarily for an arbitrator to decide unless the arbitrator
construes the contract in such a way that it could be said
to be something that no fair-minded or reasonable
person could do."
15. Associate Builders case was decided on 25th
November, 2014 when Section 28(3) of the Act stood thus:-
"In all cases, the Arbitral Tribunal shall decide in
accordance with the terms of the contract and shall take
into account the usages of the trade applicable to the
transaction."
(underline supplied)
Subsequently, as per Amendment Act, 2015 Section 28(3) was
amended as hereunder:-
"While deciding and making an award, the Arbitral
Tribunal shall, in all cases, take into account the terms of
the contract and trade usages applicable to the
transaction."
(underline supplied)
16. In the decision in Ssangyong Engineering &
Construction Co.Ltd. v. National Highways Authority of India
(NHAI) reported in AIR 2019 SC 5041 the Hon'ble Apex Court
considered paragraphs 42.3 to 45 in Associate Builders case(supra)
Arb.Appeal No.23 of 2020 & Conn. cases 25
with reference to the change made in Section 28(3) of the Act by the
Amendment Act, 2015. It reads thus:-
"29. The change made in Section 28(3) by the
Amendment Act really follows what is stated in
paragraphs 42.3 to 45 in Associate Builders (AIR 2015
SC 620), namely, that the construction of the terms of a
contract is primarily for an arbitrator to decide, unless
the arbitrator construes the contract in a manner that
no fair-minded or reasonable person would; in short,
that the arbitrator's view is not even a possible view to
take.
Also, if the arbitrator wanders outside the contract
and deals with matters not allotted to him, he committs
an error of jurisdiction. This ground of challenge will
now fall within the new ground added under Section
34(2A).
30.What is important to note is that a decision
which is perverse, as understood in paragraphs 31 and
32 of Associate Builders (AIR 2015 SC 620)(supra),
while no longer being a ground for challenge under
"public policy of India", would certainly amount to a
patent illegality appearing on the face of the award.
Thus, a finding based on no evidence at all or an award
which ignores vital evidence in arriving at its decision
would be perverse and liable to be set aside on the
ground of patent illegality. Additionally, a finding based
on documents taken behind the back of the parties by
the arbitrator would also qualify as a decision based on
no evidence inasmuch as such decision is not based on
evidence led by the parties, and therefore, would also
have to be characterised as perverse."
17. The learned counsel for the appellant cited certain
decisions worthy to be noticed in the contextual situation. The decision
of the Apex Court in New India Civil Erectors Pvt. Ltd. v. Oil
Associate Builder and Natural Gas Corporation reported in AIR
1997 SC 980 is relied on to contend that the Arbitrator being a
Arb.Appeal No.23 of 2020 & Conn. cases 26
creature of the agreement, must operate within the four corners of the
agreement and he could not travel beyond it. Relying on the decision in
Steel Authority of India v. J.C.Budharaja reported in AIR 1999 SC
3275 it was contended by the learned counsel for the appellant that to
find out whether the arbitrator has travelled beyond his jurisdiction and
acted beyond the terms of the agreement between the parties,
agreement is required to be looked into and though the interpretation
of a particular condition in an agreement would be within the
jurisdiction of the Arbitrator in cases where there was no question of
interpretation of any term of the contract, but and it is applicable solely
for reading the same as it is and still the Arbitrator ignores the said
position and awards amount despite the prohibition in the agreement,
the award would be arbitrary, capricious and without jurisdiction. It
was further held therein that since the question whether the Arbitrator
had acted beyond the terms of the contract or had travelled beyond his
jurisdiction would depend upon facts, which however would be
jurisdictional facts and are required to be gone into by the Court and
that the Arbitrator might have jurisdiction to entertain claim and yet he
might not have jurisdiction to pass award for particular items in view of
the prohibition contained in the contract and, in such cases, it would be
a jurisdictional error. Relying on the decision in Associated
Engineering Company v. Government of Andhra Pradesh and
Arb.Appeal No.23 of 2020 & Conn. cases 27
Others reported in AIR 1992 SC 232 it was contended by the learned
counsel for the appellant that an Arbitrator could not act arbitrarily,
irrationally, capriciously or independently of the contract and that his
function is only to arbitrate in terms of the contract. The position of law
settled by the aforementioned decisions and the provisions of law
referred above would clearly demarcate the scope of consideration of an
appeal filed under Section 37 of the Act. Applying the position thus
revealed we will examine whether the arbitral awards and the orders of
the District Judge virtually, confirming them call for interference, on the
grounds raised and urged.
18. Now, we will consider the core contention of the
appellant raised in the above appeals. We have already taken note of
the fact that in all the appeals the factum of occurrence of delay in
handing over apartment to the respondent concerned is not disputed.
However, the contention is that Clause 36 of the Apartment Buyers
Agreement executed by the appellant with each of the respondents
provides that the appellant could not be held responsible or liable for
not performing any of its obligation provided under the agreement if the
appellant was prevented from handing over the apartment to the buyer
concerned due to force majeure conditions. The expression 'force
majeure' is not a mere French version of the latin expression 'vis
major', which means 'an act of God'. Undoubtedly, the expression
Arb.Appeal No.23 of 2020 & Conn. cases 28
'force majeure' is a term of wider importance. A scanning of the
decisions on the subject would reveal that where reference is made to
'force majeure', the intention is to save the performing party from
consequences of anything over which he had no control. This is the
widest meaning that could be given to the term 'force majeure' going
by the decision of the Apex Court in Dhanrajamal Govindram v.
Shamji Kalidas & Co. reported in AIR 1961 SC 1285. Taking into
account the said widest meaning that could be ascribed to the said
expression it could candidly be said that it is absolutely unavailable to a
party to a contract to seek shelter and shun from the responsibility and
liability under a 'force majeure' clause in a contract in case the so
called force majeure situation is nothing but his own creation or it was
one which could have been averted by due diligence or in other words,
was within his control. This is because a person cannot be allowed to
take advantage of his own wrong, in other words, no one can be
allowed to benefits from his own wrongful act as explained by the legal
maxim 'Commondum ex injuria sua memo habere debt'. The rulings
and literature on 'force majeure' would show that where reference is
made to 'force majeure', the intention is to save the performing party
from the consequences of anything that created such a condition over
which he had no control that caused the alleged breach of contract.
Pithily stated, such happenings or eventualities which are claimed and
Arb.Appeal No.23 of 2020 & Conn. cases 29
described as 'force majeure' conditions should not be one within the
power and control of the promiser. Where the impossibility arises from
an act or default of the promiser or nothing but a direct impact of the
act or default of the promiser the promiser cannot be saved from the
inevitable consequences of breach.
19. We have already adverted to the contentions raised by
the appellant to rely on Clause 36 of the Apartment Buyers Agreement
that provides that if the appellant is prevented from handing over the
apartment due to 'force majeure' conditions he could not be held
responsible or liable for not performing any of its obligations as
provided in the agreement. After referring to Clause 36 of the
Apartment Buyers Agreement this issue was considered by the sole
Arbitrator as also by the District Court, as can be revealed from the
respective arbitral award as also from the respective order of the
District Court under Section 34 of the Act.
20. Clause 36 of the Apartment Buyers Agreement carrying
'force majeure' conditions, applicable in all these cases, reads thus:-
"36. 'force majeure'
The Company shall not be held responsible or liable
for not performing any of its obligations or
undertaking as provided in the agreement if such
performance is prevented or delayed due to 'force
majeure' conditions."
(underline supplied)
Arb.Appeal No.23 of 2020 & Conn. cases 30
21. The term 'force majeure' was defined in the written
agreement executed between the appellant and the respective
respondent in these appeals and it is extracted in all the arbitral
awards. The same reads thus:-
"Force Majeure" means any event or combination of
events or circumstances beyond the control of a Party
which cannot (a) by the exercise of reasonable diligence,
or (b) despite the adoption of reasonable precaution
and/or alternative measures be prevented, and which
adversely affects a party's ability to perform obligations
under this Agreement, which shall include but not be
limited to:
(a) Acts of God, i.e. fire drought, flood, earthquake,
epidemics, natural disasters or death or disabilities;
(b) explosions or accidents, air crashes and shipwrecks;
(c) strikes or lock-outs, Industrial Dispute;
(d) non-availability of cement, steel or other
construction material due to strikes of
manufactures, suppliers, transporters or other
intermediaries;
(e) war and hostilities of war or civil commotion;
(f) non-receipt of any approval from any governmental
authority or imposition of any adverse condition or
obligation in any approvals (including the Approvals)
from any governmental authority, including
delay in issuance of the Commencement Certificate,
Intimation of Disapproval, Occupation Certificate,
Completion Certificate and/ or any other Certificates
may be required;
(g) the promulgation of or amendment of any law, rule
or regulation or the issue of any injunction, court
order or direction from any governmental authority
that prevents or restricts a party from complying
with any or all the terms and conditions as agreed in
this Agreement; or
(h) any event or circumstances analogous to the
foregoing."
Arb.Appeal No.23 of 2020 & Conn. cases 31
22. At the risk of repetition, we will refer to the situation
explained by the appellant, in all these cases, to canvass the contention
that delay in handing over possession of apartments was due to 'force
majeure' conditions. The appellant's contention is that when the
apartments were completed and were ready to occupy, a local resident
filed a writ petition viz., W.P.(C)No.27248 of 2012 before the High
Court of Kerala seeking demolition of the apartment complex by name
'DLF Riverside' and the High Court had granted an interim order of
injunction against the Corporation of Kochi for granting occupation
certificate. Feeling aggrieved by the judgment in W.P.(C)No.27248 of
2012 ordering demolition of the said apartment complex the appellant
preferred W.A.No.1987/2014. The Division Bench initially granted a
stay of the operation of the judgment and ultimately set aside the
judgment in W.P.(C)No.27248 of 2012. Further, the Division Bench
directed the appellant herein to pay a fine of Rs.1 Crore to the District
Collector, Ernakulam for being used exclusively for building up
environment, maintaining ecological balance etc. in Chilavannoor river.
Earlier, in view of the judgment of the Single Bench in W.P.
(C)No.27248 of 2012 the Corporation of Kochi had refused to grant
occupancy certificates after numbering the apartments and virtually, it
was the said situation, according to the appellant, that prevented it
from delivering the apartments.
Arb.Appeal No.23 of 2020 & Conn. cases 32
23. A perusal of the respective arbitral award would reveal
that the arbitrator took note of the relevant fact that in all these cases
the agreement was to hand over pacca constructed apartment to the
respondent concerned within 31 months from the date of execution of
the Apartment Buyers Agreement and further that such dates in all
these cases fell much before the filing of W.P.(C) No.27248 of 2012
before this Court. As noticed hereinbefore, the appellant would also
admit occurrence of delay in handing over the apartments to the
respondents in these appeals and that is why the appellant is relying on
Clause 36 of the Apartment Buyers Agreement carrying 'force majeure'
clause. Besides the said facts, there is another fact that is unassailable
i.e., for the act of not having obtained prior clearance and proceeding
on the basis of a deemed clearance the Hon'ble Apex Court held the
direction of the Division Bench of this Court to deposit Rs.1 Crore to be
treated as fine. The decision of the Hon'ble Apex court would also
reveal as to why the authorities who were opposing the appellant herein
were held not entitled to raise objection based on violation of the
statutory provisions. The Arbitrator found the action which culminated
in imposition of fine as avoidable. Consequently, it ws held the
contingency that was described as 'force majeure' condition by the
appellant was not in existence during the relevant period within which
the apartments were to be completed and handed over to the
Arb.Appeal No.23 of 2020 & Conn. cases 33
respondents and at any rate, the appellant herein could not attribute
such circumstances as force majeure condition. Obviously, the
Arbitrator further found that the Division Bench of this Court in the
judgment in W.A.No.1987 of 2014 though set aside the order for
demolition of the apartment complex directed the appellant to pay a
fine of Rs. 1 Crore to the District Collector, Ernakulam for being used
exclusively for building up enviroment, maintaining ecological balance
etc., taking note of the violations of various statutory provisions. The
appellant can only contend that the Hon'ble Apex Court did not fully
agree with the findings of the Single Bench and also the Division Bench
of this Court on the violations of the statutory provisions. The arbitral
awards would reveal that this position was duly taken note of by the
Arbitrator. The judgment of the Hon'ble Apex Court in the Civil Appeal
filed against the judgment in W.A.No.1987 of 2014 reported in the
decision in Secretary, Kerala State Coastal Management Authority
v. DLF Universal and Others (AIR 2018 SC 389) was referred to
by the Arbitrator and the relevant paragraphs were extracted in the
awards. Paragraphs 64 and 65 of the decision reported in AIR 2018 SC
389, extracted in the awards, would reveal the flawlessness in the
conclusion arrived at by the Arbitrator in the aforesaid circumstances
and factual position and also lawful approach of the Courts in not
interfering with them besides the hollowness in the contention of the
Arb.Appeal No.23 of 2020 & Conn. cases 34
appellant that the Hon'ble Apex Court had exonerated the appellant of
all allegations raised against it with regard to the violaions of satutory
provisions:-
"64. It is the own wisdom of the MoEF that with the
establishment of SEIAA the whole file should be forwarded
to it and this was sought to be justified on the basis of the
experts available with SEIAA. What weighs with us most is
that post transfer of the file on 11.12.2013, the proposal
was cleared by SEIAA, being the final authority, and that
has never been withdrawn or cancelled or challenged. This
clearance was post a show cause notice seeking
explanation from DLF and on explanation being offered,
was issued. Now for the authorities to say otherwise or
contradict themselves would not be fair to DLF and would
cause grave uncertainty if such an approach was to be
permitted.
"65. We are, thus, not in agreement with the
findings of the Courts below on the violations alleged
against DLF except to the extent that there is a question
mark on the issue of not having obtained prior clearance
and proceeding on the basis of a deemed clearance, which
aspect, at least for the future we have clarified that
whatever be the manner in which Clause 8(3) of
Notification of 2006 is worded, it should imply henceforth
a prior clearance and necessary clarifications should be
issued by the concerned authorities in a time bound
manner to obviate such situations to arise in the future.
We feel that the direction contained in the impugned order
to deposit Rs.1 Crore (stated to be already deposited) can
be treated as a fine for the said purpose."
24. Thus, it can be said that it is after carefully going
through the decision reported in AIR 2018 SC 389 of the Apex Court
and understanding its relevance with respect to issues involved in the
claim petitions that the Arbitrator arrived at the conclusions and
findings as relates the following issue:-
Arb.Appeal No.23 of 2020 & Conn. cases 35
"Whether the respondent (the appellant herein) is in
breach of the terms of the Apartment Buyers Agreement
and the delay in handing over the apartments is caused
due to the negligence of the respondent (the appellant
herein) or force majeure conditions? "
25. After considering the entire circumstances and the
aforesaid decision of the Hon'ble Apex Court the Arbitrator decided the
aforesaid common issue framed in all the Arbitration Cases involved in
these appeals, on the following lines:-
"39. In the aforesaid judgment, the Hon'ble Supreme
Court has taken note of the fact that there is a question
mark on the issue of the respondent not having obtained
prior clearance and proceeding on the basis of deemed
clearance for which the deposit of Rs.1 Crore by the
respondent was to be treated as a fine for the said
purpose. The act of the respondent in proceeding with the
construction on the basis of a deemed clearance though
could be described as an avoidable lapse, yet may not be
termed as an act of wanton negligence. Thus, it cannot be
held that the respondent has acted in willful breach of the
agreement even though there were avoidable lapses on
their part in obtaining prior clearances from the statutory
authorities and the undue delay occasioned on account of
the said circumstances cannot be attributed to factors
exclusively Force Majeure. The issue is found accordingly."
26. In the petitions filed under Section 34 of the Act against
the arbitral awards, obviously, the District Courts did not find any
ground to interfere with the arbitral awards.
27. As stated earlier, before us the appellant did not dispute
the crucial and very relevant aspect that W.P.(C) No.27248 of 2012
which was instrumental for refusal of occupancy certificate by the
Corporation of Kochi was filed after the expiry of the agreed period for
Arb.Appeal No.23 of 2020 & Conn. cases 36
completion and handing over of the apartments to the respondents and
further that the claim petitions which culminated in the awards
impugned before the District Courts only after more than four and a
half years since the expiry of the agreed period for completion and
handing over of the apartments, in all these cases. The said fact is
indisputable going by the datas and details discernible from the records.
It is the interim order passed in the said writ petition and the
subsequent developments and the consequential refusal to issue
occupancy certificate by the Corporation of Kochi that were claimed as
'force majeure' conditions by the appellant. Even though the appellant
could contend that the Apex Court did not fully agree with the findings
of the Single Bench and also the Division Bench of this Court on the
violations of the statutory provisions the indisputable position obtained
from the decision reported in AIR 2018 SC 389 is that the Apex Court
held that there is a question mark on the issue of the appellant not
having obtained prior clearance and proceeding on the basis of deemed
clearance and it is on that count that it was held therein that the
direction contained in the judgment of the Division Bench in
W.A.No.1987 of 2014 to deposit Rs.1 Crore could be treated as fine. In
this context, it is to be noted that in the Apartment Buyers Agreement
the term "Force Majeure" was defined as any event or combination of
events or circumstances beyond the control of a Party which cannot (a)
Arb.Appeal No.23 of 2020 & Conn. cases 37
by the exercise of reasonable diligence, or (b) despite the adoption of
reasonable precaution and/or alternative measures be prevented, and
which adversely affects a party's ability to perform obligations under
this Agreement, for the purpose of Clause 36 of the said agreement. In
the light of the manner in which the term 'force majeure' has been
defined in the Apartment Buyers Agreement for the purpose of Clause
36 of the agreement, which is relied on by the appellant; in view of the
fact that for not having obtained prior clearance and proceeding on the
basis of deemed clearance the direction for deposit of Rs.1 Crore was
ordered to be treated as fine imposed on the appellant; being the
builder by obtaining prior clearance or by refraining itself from
proceeding based on deemed clearance and by proceeding with
construction scrupulously Reading to all statutory requirements and the
further fact that W.P(C).No.27248 of 2012 was filed only after the
expiry of the period prescribed for completion and handing over of the
apartments the appellant could have avoided the situation which it
described as force majeure condition by showing due diligence. In
short, the appellant could not be heard to contend that it was beyond
its control. At any rate, the respondents herein who were the proposed
buyers cannot be blamed or faulted for the delay occasioned in the
matter of completion and handing over of the apartments. That apart, it
is pertinent to note that even in these appeals the specific stand of the
Arb.Appeal No.23 of 2020 & Conn. cases 38
appellant, after referring to the relevant conditions in the agreement, is
that the respondents are entitled to get back the money paid by them.
Grounds (I) and (J) raised relying respectively on Clauses 10.2 and
10.3 of Apartment Buyers Agreement in these appeals would
undoubtedly reveal that the appellant itself would admit the liability to
refund the amount paid by the respondents in these appeals. When the
appellant themselves would admit the liability to refund the amount
paid and when it is evident that in all these cases besides the amounts
paid by the respondents they were awarded only interest thereon, at
the rate of 9% per annum, in the manner specifically mentioned in
those awards the only surviving contention is with respect to the grant
of interest on the principal amount paid by the respondents.
28. It is true that the appellant got a case that in terms of
Clause 10.3 of the agreement the remedy available to the respondents
upon failure of the appellant to hand over possession of the apartment
within the period agreed in the agreement, was to terminate the
agreement and in such eventuality, the appellant would have the liberty
to sell the apartment in question and to refund the amount within
ninety days from the date of receipt of the entire sale consideration. It
is also its case, placing reliance on Clause 10.2 of the agreement, that
the only remedy of the respondents was to get refund of the amount
paid without interest or damages. The arbitral awards would reveal
Arb.Appeal No.23 of 2020 & Conn. cases 39
that the Arbitrator did not award compensation in any of the arbitration
cases involved in the above appeals. Thus, it is obvious that the
surviving ground of attack is against the grant of interest on the
amount paid by the respondents. The appellant's contention is that the
arbitral awards are against the public policy of India. In the light of the
decision in Ssangyong's case (supra) 'public policy of India' is now
constricted to mean firstly, that a domestic award is contrary to the
fundamental policy of Indian law, as understood in paragraphs 18 and
27 of Associate Builders case (supra), or secondly, that such award is
against basic notions of justice or morality as understood in paragraphs
36 to 39 of Associate Builders case (supra). Furthermore, it was
held in Ssangyong's case (supra) thus:-
"Explanation 2 to Section 34(2)(b)(ii) and Explanation 2
to Section 48(2)(b)(ii) was added by the Amendment
Act only so that Western Geco (AIR 2015 SC 363)
(supra), as understood in Associate Builders (supra),
and paragraphs 28 and 29 in particular, is now done
away with."
It was also held in paragraphs 26, 27 and 30 therein thus:-
"26. Insofar as domestic awards made in India are
concerned, an additional ground is now available under
sub-section (2A), added by the Amendment Act, 2015,
to Section 34. Here, there must be patent illegality
appearing on the face of the award, which refers to such
illegality as goes to the root of the matter but which
does not amount to mere erroneous application of the
law. In short, what is not subsumed within "the
fundamental policy of Indian law", namely, the
contravention of a statute not linked to public policy or
public interest, cannot be brought in by the backdoor
Arb.Appeal No.23 of 2020 & Conn. cases 40
when it comes to setting aside an award on the ground
of patent illegality.
"27. Secondly, it is also made clear that
reappreciation of evidence, which is what an appellate
court is permitted to do, cannot be permitted under the
ground of patent illegality appearing on the face of the
award.
30. What is important to note is that a decision
which is perverse, as understood in paragraphs 31 and
32 of Associate Builders (AIR 2015 SC 620) (supra),
while no longer being a ground for challenge under
"public policy of India", would certainly amount to a
patent illegality appearing on the face of the award.
Thus, a finding based on no evidence at all or an award
which ignores vital evidence in arriving at its decision
would be perverse and liable to be set aside on the
ground of patent illegality. Additionally, a finding based
on documents taken behind the back of the parties by
the arbitrator would also qualify as a decision based on
no evidence inasmuch as such decision is not based on
evidence led by the parties, and therefore, would also
have to be characterised as perverse."
In the light of the afore-extracted paragraphs from Ssangyong's case
(supra), in the fitness of things and also to understand the position
fully, we will extract paragraphs 18 and 27 of Associate Builders case
(supra). They read thus:-
"18. In Renusagar Power Co. Ltd. v. General
Electric Co. (1994 Supp (1) SCC 644), the Supreme
Court construed Section 7(1)(b)(ii) of the Foreign
Awards (Recognition and Enforcement) Act, 1961:
"7.Conditions for enforcement of
foreign awards.-(1) A foreign award may not be
enforced under this Act-
(b) if the Court dealing with the case is
satisfied that-
Arb.Appeal No.23 of 2020 & Conn. cases 41
(ii) the enforcement of the award will be
contrary to the public policy."
In construing the expression "public policy" in the
context of a foreign award, the Court held that an
award contrary to
(i) The fundamental policy of Indian law,
(ii) The interest of India
(iii) Justice or morality,
would be set aside on the ground that it would be
contrary to the public policy of India. It went on further
to hold that a contravention of the provisions of the
Foreign Exchange Regulation Act would be contrary to
the public policy of India in that the statute is enacted
for the national economic interest to ensure that the
nation does not lose foreign exchange which is
essential for the economic survival of the nation (see
SCC p.685, para 75). Equally, disregarding orders
passed by the superior courts in India could also be a
contravention of the fundamental policy of Indian law,
but the recovery of compound interest on interest,
being contrary to statute only, would not contravene
any fundamental policy of Indian law (see SCC pp.689
& 693, paras 85 & 95).
xxxxxx
27. Coming to each of the heads contained in
Saw Pipes [(2003) 5 SCC 705] judgment, we will
first deal with the head "fundamental policy of Indian
law". It has already been seen from Renusagar
Power Co. Ltd. v. General Electric Co., (1994 Supp
(1) SCC 644) judgment that violation of the Foreign
Exchange Act and disregarding orders of superior
courts in India would be regarded as being contrary to
the fundamental policy of Indian law. To this it could be
added that the binding effect of the judgment of a
superior court being disregarded would be equally
violative of the fundamental policy of Indian law."
29. It is held in Associate Builders case (supra) that what
would be a public policy would depend upon the nature of transaction
and nature of the statute. For the said purpose, the pleadings of the
Arb.Appeal No.23 of 2020 & Conn. cases 42
parties and the materials brought on record would be relevant so as to
enable the court to judge the concept of what was in public good or
public interest or what would otherwise be injurious to the public good
at the relevant point, as contradistinguished by the policy of a
particular Government, as held in State of Rjasthan v. Basant
Nahata [(2005) 12 SCC 77). Paragraph 21 of the decision in DDA v.
R.S.Sharma and Co. reported in [(2008) 13 SCC 80] was extracted
with agreement in Associates Builders case (supra).
30. As can be seen from paragraph 18 in Associate
Builders case (supra) even recovery of compound interest on interest,
being contrary to statute only, would not contravene any fundamental
policy of India. If that be so, how can contravention of a clause in an
agreement relating to interest or "not taking into account such a
clause", in a domestic arbitral award would make it one against the
fundamental policy of India so as to say that it is against the public
policy of India. We have already extracted paragraph 29 of the
decision in Ssangyong's case (supra). It would undoubtedly go to
show that in the light of the amendment brought to Section 28(3) of
the Act by Amendment Act, 2015 construction of the terms of a
contract is primarily for an Arbitrator to decide, and therefore, in the
light of paragraphs 42.3 to 45 in Associate Builders case (supra)
unless the Arbitrator construes the contract in a manner that no fair-
Arb.Appeal No.23 of 2020 & Conn. cases 43
minded or reasonable person would do, Court's intervention with the
construction is absolutely uncalled for. In such circumstances, it can
only be said that it would not be available for construction of the court
if the view is a plausible one. Furthermore in Ssangyong's case
(supra) it was held that if the Arbitrator wanders outside the contract
and deals with the matters not allotted to him it can only be said that
he commits an error of jurisdiction and in such eventuality, in the light
of the decision, this ground of challenge will now fall only within the
new ground added under Section 34(2A) of the Act viz., patent
illegality. Section 34(2A) reads thus:-
"34. Application for setting aside arbitral award:-
xxxxxxxx xxxx xxxxxxx
(2A) An arbitral award arising out of arbitrations
other than international commercial arbitrations, may
also be set aside by the Court, if the Court finds that
the award is vitiated by patent illegality appearing on
the face of the award:
Provided that an award shall not be set aside
merely on the ground of an erroneous application of
the law or by reappreciation of evidence."
31. Once it is held that construction of an agreement fell for
consideration of the Arbitrator, in the light of the amendment to Section
28(3) of the Act the determination thereupon shall not ordinarily be
interfered with. To put it succinctly the Court's jurisdiction in this
behalf is merely to see whether the Arbitrator had exceeded his
Arb.Appeal No.23 of 2020 & Conn. cases 44
jurisdiction or not. It is also to be held that the expression "error
apparent on the face of the records" employed in Section 34(2A) would
not imply closer scrutiny of the merits of documents and materials on
record and that if it is found that the view of the Arbitrator is a plausible
one the Court would rather, should refrain from interfering with the
arbitral award.
32. The Arbitration Act, 1940 did not contain any specific
provision relating to the power of the Arbitrator to award interest and in
such circumstances, as a matter of course, it was limited to awarding of
interest from the date of the award till the date of realisation. In other
words, prior to the coming into force of the 1996 Act there was
considerable confusion as to the power of the Arbitrator to award
interest from the date of cause of action up to the date of reference
viz., pre-reference period as also pendente lite viz., from the date of
reference to the date of award. However, the position in relation to the
said stages was settled by the Hon'ble Apex Court by holding that in the
absence of express bar in the contract concerned regarding the award
of interest Arbitrator got jurisdiction and authority to award interest for
all the three stages i.e., pre-reference period, pendente lite and post-
award period (see the decisions of the Hon'ble Apex Court in
Secretary, Irrigation Deptt., Government of Orissa v. G.C.Roy
reported in (1992) 1 SCC 508, Executive Engineer, Dhenkanal
Arb.Appeal No.23 of 2020 & Conn. cases 45
Minor Irrigation Division v. N.C.Budharaj reported in (2001) 2
SCC 721 and in Manalal Prabhudayal v. Oriental Insurance Co.
Ltd. reported in AIR 2006 SC 3026. Now, in view of the express
provision under Section 31(7) of the Act, on the issue of power of
Arbitrator to award interest there is no scope for any confusion.
Section 31(7) reads thus:-
"31. Form and contents of arbitral award:-
xxxxx xxxxxx
7(a) Unless otherwise agreed by the
parties, where and insofar as an arbitral award is for
the payment of money, the arbitral tribunal may include
in the sum for which the award is made interest, at
such rate as it deems reasonable, on the whole or any
part of the money, for the whole or any part of the
period between the date on which the cause of action
arose and the date on which the award is made.
(b) A sum directed to be paid by an
arbitral award shall, unless the award otherwise directs,
carry interest at the rate of two per cent, higher than
the current rate of interest prevalent on the date of
award, from the date of award to the date of payment."
Explanation.- The expression "current rate of interest"
shall have the same meaning as assigned to it under
clause (b) of section 2 of the Interest Act, 1978 (14 of
1978)."
If at all there was any further room for doubt on that aspect it was also
settled by the Apex Court in the decision in Sayeed Ahmed & Co. v.
State of Uttar Pradesh and Others reported in (2009) 12 SCC 26.
It was held therein that in view of Section 31(7)(a) of the Act in case
where there is an express bar in the contract against claim for interest
Arb.Appeal No.23 of 2020 & Conn. cases 46
it would operate not only during pre-reference period but also during
pendente lite period. However, it was held that any provision in a
contract barring interest would operate only till the date of award and
not thereafter.
33. In the afore-circumstances, the question is by awarding
interest whether the Arbitrator had committed any error apparent on
the face of the record or had misconducted himself in passing the
award. Before delving into the said issue in detail it is relevant to note
that in every contract, there is an implied covenant of good faith and
fair dealing and there is a general presumption that the parties to the
contract will deal with each other honestly, fairly and in good faith so as
not to destroy the right of the other party to receive the benefit of the
contract.
34. Applying the provision under Section 31(7) and the
position of law settled in Sayeed Ahmed & Co. Case (supra) the
aforesaid question has to be considered, of course, by looking into the
question whether there is any express bar to claim interest in the cases
on hand in the agreements concerned. Admittedly, all the agreements
concerned carry similar conditions. In the light of the pleadings and the
nature of the arguments advanced we think that for a proper
appreciation of the contention of the appellant on the aforesaid question
it is only proper and profitable to refer to Clauses 10.2, 10.3 & 10.4 of
Arb.Appeal No.23 of 2020 & Conn. cases 47
the Property Buyers Agreement.
35. A perusal of the arbitral awards challenged under
Section 34 of the Act before the Courts below would reveal that the
Clauses 10.2 to 10.4 of the Property Buyers Agreement fell for
consideration of the Arbitrator. In such circumstances, in the light of
the settled position of law referred above made in the light of the
amended provision under Section 28(3) of the Act it cannot be
interfered with. A bare perusal of Clauses 10.2 to 10.4 of the Property
Buyers Agreement and the factual aspects described as force majeure
conditions by the appellant to plead non-liability to pay interest on the
amount paid by the respondents-apartment allottees, would reveal that
the appellant cannot be permitted to wriggle out of the liability to
refund the amount paid by the respondents with interest solely relying
on the said clauses in the factual scenario obtained in the cases on
hand. The arbitral awards impugned before the District Courts under
Section 34 of the Act would reveal that the Arbitrator considered the
contentions of the appellant made with reference to Clauses 10.2 to
10.4 of the agreements while passing the award. In such
circumstances, consideration of the contentions made by the appellant
based on the aforesaid clauses can be had only to see whether the
awards are infected with patent illegality. Clause 10.2 of the
agreements would reveal that it is applicable in a contingency where
Arb.Appeal No.23 of 2020 & Conn. cases 48
failure to deliver possession was due to Government rules, order,
notifications etc. To be precise, the said clause provides that if the
appellant company is unable to construct/continue or complete the
construction of the said building/the said complex due to conditions
which have arisen because of any governmental/regulatory authority's
action, inaction or omission and that apart it would further reveal that
the further condition regarding applicability of the other limbs of the
clause would arise only in the circumstances mentioned above if the
company in its sole discretion challenge the said action, inaction or
omission on the part of the governmental/regulatory authority's action,
inaction or omission that made the company unable to
construct/continue or complete the construction of the said
building/said complex. The Arbitrator and the District Courts have
already found that before filing of W.P.(C)No.27248 of 2012 the agreed
period within which the construction of the apartments should have
been completed and possession should have been handed over to the
allottee respondents was over in all these cases. In such circumstances,
it is not available to the appellant to canvass occurrence of force
majeure conditions subsequent to the said period to escape the liability
and to take shelter under Clause 10.2 of the agreement. Same is the
position with respect to Clause 10.3 of the agreement. Solely because
in terms of Clause 10.3 in case of failure to get delivery of possession
Arb.Appeal No.23 of 2020 & Conn. cases 49
the apartment allottee would be having the liberty to terminate the
agreement with notice to the appellant and in such eventuality the
appellant would be entitled to sell or dispose the apartment and the
parking spaces to any other party and would be liable to refund the
amount paid by the allottee only within 90 days from the date of full
realisation of the sale price after sale to such third party, cannot be a
reason to canvass the position that it should be the only remedy
available to apartment allotees like the respondents to aleviate such
grievances and they could not take to arbitration in terms of the
arbitration clause under the Apartment Buyers Agreement. Merely
because under Clause 10.3 of the agreement the allottee is entitled to
issue notice and following the procedure thereunder to terminate the
agreement the appellant cannot contend that arbitration clause in the
agreement should be unavailable to such allottees. True that, in case
the allottee avails the said remedy it would, in a way, be beneficial to
the appellant inasmuch as, in such eventuality, it would fetch
opportunity to the appellant to effect sale of the apartment concerned
to a third party and would also fetch the extended time to effect refund
the amount paid by the allottees. Merely because the apartment
allottee is entitled to terminate the agreement in terms of the said
clause at no stretch of imagination it could be said that merely because
of existence of such a clause the arbitration clause in the agreement
Arb.Appeal No.23 of 2020 & Conn. cases 50
would become redundant. Being a party to the agreement, certainly,
the appellant cannot be heard to raise such a contention. A perusal of
Clause 10.4 of the agreement would reveal that it provides option to
the appellant company to terminate the principal agreement and
supplementary agreement in the contingency envisaged thereunder. It
is an indisputable fact that the appellant company had not terminated
the agreements with the respondents. In fact, we could not see any
such case for the appellant raised before the Arbitrator and the District
Courts.
36. Apart from the aforesaid aspects another important
aspect is also to be looked into while considering the contention of the
appellant against the grant of interest by the Arbitrator. There is no
dispute with respect to the existence of arbitration clause in all the
Apartment Buyers Agreements executed between the appellant and the
respondents in the appeals. There is absolutely no case for the
appellant that such a clause is not included in such agreements. In
fact, Clause 47 of the agreements contains the arbitration clause and
the same has been extracted in all the arbitral awards. In the
contextual situation, it is also relevant to refer to clause 47 of the
Apartment Buyers Agreement as hereunder:-
"47. Dispute Resolution Agreement.
All or any disputes arising out of or relating to or
concerning or touching interpretation and validity of the
Arb.Appeal No.23 of 2020 & Conn. cases 51
terms thereof and the respective rights and obligations
of the parties shall be settled amicably by mutual
discussion failing which the same shall be settled
through arbitration. The arbitration shall be governed
by the Arbitration and Conciliation Act, 1996 or any
statutory amendments/modifications thereof for the
time being in force. The arbitration proceedings shall be
held at an appropriate location in Ernakulam by a sole
arbitrator who shall be appointed by the Company and
whose decision shall be final and binding upon the
parties. The Apartment allottee hereby confirms that
the Apartment Allottee shall have no objection to this
appointment even if the person so appointed, as the
sole arbitrator, is an employee or advocate of the
Company or is otherwise connected to the Company and
the Apartment Allottee confirms that notwithstanding
such relationship/connection, the Apartment Allottee
shall have no doubts as to the independence or
impartiality of the said sole arbitrator. The Courts at
Ernakulam alone and the Kerala High Court at
Ernakulam shall have the jurisdiction."
In view of the existence of arbitration clause Section 16(1)(a) of the Act
assumes relevance. It reads thus:-
"16. Competence of arbitral tribunal to rule on
its jurisdiction.- (1) The arbitral tribunal may rule
on its own jurisdiction, including ruling on any
objections with respect to the existence or validity of
the arbitration agreement, and for that purpose,-
(a) an arbitration clause which forms part of a
contract shall be treated as an agreement
independent of the other terms of the
contract; .............."
Thus, the said provision declares that an arbitration clause in a contract
shall be treated as an agreement under Section 7 of the Act
independent of the other terms of the contract. A perusal of Clause 47
as extracted above would undoubtedly go to show that it does not
Arb.Appeal No.23 of 2020 & Conn. cases 52
expressly bar claim of interest. In the aforesaid circumstances and in
view of the absence of any express bar on claim of interest in the
agreement and in the light of the decision of the Apex Court in
M/s.Jagdish Rai and Brothers v. Union of India reported in AIR
1999 SC 1258 whereunder the Apex Court held that interest ought to
be awarded in all cases when there is a decree of money unless there
are strong reasons to decline the same. We do not find any reason to
hold that the awards in question are infected with patent illegality. In
fact, there is no illegality at all in the awards. In the contextual
situation, it will not be inappropriate to refer to a contention taken up
by the appellant in all these cases before the Arbitrator which was
specifically mentioned in the arbitral awards concerned. It would reveal
that the contention was that as per Clause 10.4 of the agreement, the
liability of the appellant is limited to refund of the amounts paid by the
apartment allottees with simple interest at 9% per annum for the
period such amounts were lying with the appellant and that the
respondents shall not be liable to pay any other compensation
whatsoever. We have already noted that in none of the cases
compensation was awarded. What was ordered is refund of principal
amount with interest at all the three stages viz., pre-reference,
pendente lite and post-award.
Arb.Appeal No.23 of 2020 & Conn. cases 53
For the aforesaid reasons we do not find any ground to
interfere with the impugned orders passed by the District Courts under
Section 34 of the Act whereby and whereunder the arbitral awards
concerned were confirmed, in exercise of the limited scope under
Section 37 of the Act. In the result, Arbitration Appeal Nos.23, 26, 31
of 2020 and 6, 7 & 8 of 2021 are dismissed but, without any cost.
Sd/-
C.T.RAVIKUMAR
Judge
Sd/-
K.HARIPAL
Judge
TKS
