M/S.Kikio'S Spaces Private ... vs M/S.Ramasamy Charitable Trust
2021 Latest Caselaw 10536 Mad

                                                        ARBITRATION ORIGINAL PETITION No.47 OF 2021

                             THE HIGH COURT OF JUDICATURE AT MADRAS

                                          Reserved on            Delivered on
                                          03~09~2021              13~09~2021

                                                       CORAM:

                            THE HONOURABLE MR.JUSTICE N. SATHISH KUMAR


                             ARBITRATION ORIGINAL PETITION No.47 OF 2021

                      M/s.Kikio's Spaces Private Limited,
                      Rep. by its Managing Director Mr.M.Shyam Kumar,
                      No.A-3, Darshan Partment, No.2 Second Main Road,
                      Gandhi Nagar, Adyar, Chennai – 600 020.                     ... Petitioner

                                                          .Vs.

                      1. M/s.Ramasamy Charitable Trust,
                         A Public Charitable Trust,
                         Rep. by its Trustee Muralidharan,
                         No.93, Old No.50, Chamiers Road,
                         R.A.Puram, Chennai – 600 029.
                      2. Mr.Raghavan
                      3. Mr.Muraladharan
                      4. Mrs.Usha                                                ... Respondents


                      Prayer: Petitions filed under section 34 [2] [[a] [ii], 24 [2] [a] [iv], 34
                      [2] [b] [i] [ii] of the Arbitration and Conciliation Act,. 1996 to set aside
                      the arbitration Award in A.F.No.155 of 2018 dated 24.04.2021 passed

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                                                             ARBITRATION ORIGINAL PETITION No.47 OF 2021

                      by the learned sole arbitrator for the reasons mentioned above and allow
                      the claim of the claimant and direct the respondents 1 to 4 to pay the cost
                      to the claimant.
                                    For Petitioner       :        Mr.V,Raghavachari
                                                                  for M/s.S.Marisingh

                                    For respondents      :        Mr.R.Thiagarajan


                                                        ORDER

Aggrieved over the award passed by the sole arbitrator, present

petition has been filed challenging the same.

2. Brief facts leading to filing of this petition is as follows :

2.1 The subject matter of the property was originally owned by one

Suseela Ramasamy. However, her husband Ramasamy claiming to be

the owner of the property executed a Deed of Trust dated 27.05.1987

making himself as the founder and appointed himself, Suseela

Ramasamy and D.V.Muralidharan as Trustees. The said Ramasamy died

on 24.01.1994 leaving behind his wife Suseela Ramasamy and also an

unregistered Will dated 24.04.1994 bequeathing the suit properties in

favour of the Trust created by him with a direction to the Trustees to sell

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the house for the best possible price and the trustees shall hold the fund

representing the sale proceeds as the corpus fund of the Trust and entire

proceeds of sale shall be invested in any other capital assets as provided

in the Income Tax Act which qualify for exemption of tax on capital

gains. Besides, he had also appointed his wife Suseela Ramasamy as an

Executrix of the said Will. Suseela Ramasamy also died on 03.09.2011

leaving behind her unregistered Will dated 24.05.2010. Both the Wills

were probated before the High Court in O.P.No.487 of 2014 and

O.P.No.196 of 2013. Prior to the Will being probated, the claimant has

entered into a Memorandum of Agreement dated 12.07.2013 for

purchase of the suit property on various conditions and paid an advance

of Rs.one lakh on the date of the Memorandum of Agreement.

2.2 The Memorandum of Agreement also stipulates that the title

should be established within six months from the date of execution of

Memorandum of Agreement by getting Will probated and patta in respect

of the property to be obtained within 7 days of the completion of the

probate proceedings. The claimant has to obtain necessary sanctions,

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permits, quotas and licenses for development of the property. After

satisfying all the pre-requisites according to the agreement, the claimant

agreed to pay a sum of Rs.one crore. However, the respondent had not

obtained patta in respect of the property and it is also found that the

property was not in the name of Ramasamy and it is in the name of

Suseela Ramasamy. It is also claimed by the claimant that there is a

dispute in the measurement, which has to be set right. The claimant has

in fact spent considerable amount for these aspects. However, the

respondents did not comply the conditions and established the title. It is

also agreed that the remaining consideration of Rs.39,53,00,000/- shall

be paid by the claimant within a period of 6 months from the date of

obtaining copies of the ownership prerequisites from the respondents.

However, the respondents have not completed their obligations and they

have issued a letter dated 23.07.2016 rescinding the Memorandum of

Agreement dated 12.07.2013. Hence, reference has been made for

seeking relief to set aside the communication dated 23.07.2016 issued by

the respondents rescinding the Memorandum of Agreement dated

12.07.2013 as premature and invalid in the circumstances of the case and

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for granting fresh time to complete the transaction as per the

Memorandum of Agreement dated 12.07.2013 and for further reliefs.

3. The respondents, admitted the Memorandum of Agreement,

however denied the other allegations of the claimants, it is their

contention that they had agreed to sell the property for a total

consideration of Rs.40,52,00,000/- at the instance of the claimant and the

claimant had parted a token advance of Rs.one lakh. The respondents

had also produced extract from the Town Survey bearing C.A.No.1261 of

2013 dated 11.12.2013 and also obtained probate in respect of the Will

of late Ramasamy on 29.10.2013 and also provided all the revenue

documents to establish title of the property. After June 2015, the

claimant did not fulfil their obligations under the Memorandum of

Agreement. Whenever, the first respondent tried to communicate about

the completion of the obligations they did not perform their part of the

obligations. Therefore, the respondents had issued a letter dated

16.12.2016, calling upon the claimant to pay Rs.One Crore on

29.02.2016 and the balance amount of sale consideration by 30.04.2016.

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However, the respondent had sent a communication with false and

baseless allegations. Therefore the respondent had rescinded the contract

on 23.07.2016 by returning a cheque for Rs.one lakh. Hence, disputed

the entire allegations of the claimant.

4. The rejoinder and reply has also been filed disputing the

allegations of each other.

5. The learned arbitrator has framed as many as 11 issues. On the

side of the claimant C.W.1 has been examined and C1 to 17 have been

marked and on the side of the respondents, R.W.1 has been examined

and exhibits R.1 to R24 have been marked. The learned arbitrator after

analysing entire evidence on record dismissed the claim as against which

the present petition has been filed.

6. The main submissions of the learned counsel for the respondent

is that the award passed by the learned arbitrator is nothing but perverse,

and the learned arbitrator has not considered the agreed terms of the

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parties in the Memorandum of Agreement. One of the pre-requisites is to

provide a patta to satisfy the title, which has not been done by the

respondents. The question of payment of remaining sale consideration

would arise only after the respondents satisfied the title to the property.

Therefore, when the parties have understood and agreed upon certain

terms in the contract, the respondents have to honour the commitment

and cannot unilaterally rescind the contract entered between them. The

learned arbitrator, in fact, has gone beyond the terms of the contract and

recorded the finding on the basis of assumptions and inferences. Such

findings is nothing but perverse and goes to the root of the matter. The

learned arbitrator has recorded a finding to the effect that the respondent

must have been given the documents instead of a finding the truth

whether those documents have been given or not and on mere

assumption, such finding has been recorded, which in fact is against the

very terms of the contract. Such findings is nothing but perverse and

goes to the root of the matter. Hence, submitted that the award has to be

set aside and the matter has to go for fresh arbitration.

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7. The learned counsel for the respondents would contend that the

learned arbitrator, in fact has considered the entire evidence and had

appreciated the background and documents and recorded the finding in

every issue and found that the petitioner has paid just Rs.one lakh as

against a total consideration of more than Rs.40 crores and is not ready

and willing to perform their part of the contract. They have no

wherewithal to pay the remaining consideration despite, the title has been

satisfied and they had not paid the remaining sale consideration. Hence,

it is their contention that when the learned arbitrator has recorded a

finding after appreciation of entire evidence, it cannot be said that merely

because some other view is possible, the same cannot be construed as

illegality, which goes to the root of the matter. Hence, prayed for

dismissal of this petition.

8. Though several grounds have been made, the crux of the

arguments is towards patent illegality in the award. It is well settled that

the term 'patent illegality' must go to the root of the matter. If the

arbitrator has gone contrary beyond the terms of the contract or granted a

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relief in the matter not in dispute, then it can be said that the matter falls

within the ambit of patent illegality. Therefore, merely because a

different view has been adopted and some other view is also possible,

that cannot be a ground to hold that the view adopted by the arbitrator

falls within the ambit of perversity. This Court is also aware of its limited

role under section 34 of the Arbitration and Conciliation Act in

reappreciating the entire evidence.

9. In the above background, when the award is perused in the

light of the submissions made by the learned counsel for the petitioner,

the entire dispute revolve around the cancelation of the Memorandum of

Agreement 12.07.2013 entered between the parties. The claimant,

namely the petitioner had agreed to purchase the property for a total sale

consideration of Rs.40,52,00,000/-. The Memorandum of Agreement has

been executed on 12.07.2013 and an advance of Rs.one lakhs has been

paid on the same day. The Trustees have executed the agreement. The

major clauses in the Memorandum of Agreement is as follows :

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Clause [c] “Ownership Pre-requisites” shall mean

due satisfaction of the following requirement by the

party of the First Part :

[a] obtaining probate Order of the Will under

Probate Proceedings before the High Court of Madras.

[b] obtaining patta for the subject property; and

[c] submitting copies of all documents relating to

subject property and obtaining legal clearance from the

party of Second Part's counsel on the title to the subject

property.”

Clause 2 : Responsibilities and obligations of the

Party of the Firt Part

2.1 The party of the First Part hereby confirms

that probate proceedings has been initiated by the

Executor in O.P.No.196 of 2013 before the Hon'ble

High Court, Madras, The part of the First Part agreed to

hand over copies of the documents relating to Probate

Proceedings filed before the Hon'ble High Court of

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Madras to the Party of the Second Part upon execution

of this MOA.

2.2 The Party of the First Part acknowledge and

states that while the Party of the First Part is a legatee

under the Will in respect of the Sub Property, the Party

of the First Party awaits the Order of the High Court of

Madras in the Probate Proceedings.

2.3 The Party of the first Part undertakes to apply

for and obtain patta in its name in respect of the subject

property after the Will is probated.

2.4 The Party of the First Part expressly states

and confirms that the Party of the First Part is the

absolute owner of the subject property and that its title

to the subject property is good, valid, marketable and

subsisting and that no one else except the Party of the

First Part would have any right, title, interest, claim,

demand or share in the Subject Property.

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2.5 The Party of the First Part confirms and

warrants that upon obtaining probate and patta for the

subject property, the Party of the First Part and/or its

nominees would be entitled to sell the subject property

to the Party of the Second Part as per the terms of this

MOA and that there is nothing in the Trust Deed of the

Party of the First Part that prohibits or prevents Party of

the First Part from entering into this MOA or selling the

subject property.

2.6 The Party of the First Part acknowledges that

the Party of the Second Pard has evinced interest in the

subject property solely on the basis of the representation

of the Party of the First Part that they hold title and

ownership over the subject property. The Party of the

First Part shall expedite the Probate proceedings and

establish its title to the subject property within SIX

months from execution of this MOA. The Party of the

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First Part further agrees to keep the Party of the Second

Part informed of any development[s] in this regard.

2.7 The Party of the First Part agrees to provide

copies of all title and other documents relating to the

subject property including revenue records and receipts

for scrutiny by Party of the Second Part's counsel. The

Party of the First Part further agrees to execute such

documents at the instance of the Party of the Second

Part's counsel as may be required by the latter to

establish, support or substantiate Party of the First Part's

title to the Subject Property. The Party of the First Part

further agrees to pass necessary resolution relating to

sale of the subject property to the Party of the Second

Part as per the terms of the MOA.

2.8 The Party of the First Part undertakes to

obtain necessary approvals and sanctions from the

authorities concerned that are mandatory/ may be

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required to establish its ownership to the subject

property.

2.9 The Party of the First Part confirms that the

subject property is in its possession and that the same is

free from any let, hindrance, charge, mortgage or

encumbrance whatsoever.

2.10 The Party of the first Part shall not creat any

mortgage, charge or encumbrance over the subject

property or do any act or deed whatsoever nature, which

will be detrimental to the interest of the Party of the

Second Part, during the subsistence of the MOA.

2.11 The Party of the First Part agrees to keep the

Party of the Second Part and/or its nominees fully

indemnified and harmless against any loss or liability,

cost or claim, action or proceedings that may arise

against the Party of the Second Part and/or its nominees

on account of any claim by anyone or defect in or want

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of title or any act or omission on the part of the Party of

the First Part.

2.12 Subject to terms of this MOA, the Part of the

First Part agrees to hand over possession of the subject

property to the Party of the Second Part immediately

upon receipt of the agreed sale consideration from the

Party of the Second Part.

2.13 The Party of the First Part confirms that the

original title documents relating to the subject property

are in its possession and that after the probate Order

and patta are obtained, the Party of the Second Part or

its nominees shall be entitled to inspect the original title

documents at any after providing prior notice to the

Party of the First Part.

2.14 The Party of the First Part hereby

undertakes not to enter into any negotiations with any

person, developer/builder or enter into any similar

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agreement/arrangement in respect of the subject

property during the subsistence of this MOA.

2.15 It shall be the sole responsibility of the Party

of the First Part to pay all taxes, charges, levies and

other public charges relating to the subject property

promptly until the possession is handed over and

provide copies of such receipts to the Party of the

Second Part.

2.16 Within SEVEN days from the date of

completion of Probate Proceedings, the Party of the First

Part agrees to execute and register a power of attorney

in favour of the Party of the Second Part, authorizing the

latter or its nominee/s to apply for and obtain the

necessary sanction, permits, quotas and licenses on

behalf of the Party of the First Part in connection with

development of the Subject Property.

2.17 The Party of the First Part agrees to permit

the Party of the Second Part to conduct soil test, site

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inspection and measurement verification of the Subject

upon execution of this Agreement.”

10. The main claim of the petitioner is that he is all along ready to

purchase the property. Whereas, the learned arbitrator, has in fact,

recorded a factual finding and come to the conclusion that the claimant is

not ready and willing to perform their part of the contract. It is to be

noted that the title itself has not been verified at the time of entering into

the agreement. Though the suit property stood in the name of Suseela

Ramasamy, her husband claimed to be the owner of the property and

created a Trust, which has not been verified by the claimant. That itself

clearly indicate that the intention to complete the transaction is absent

from the beginning. Though the contract indicate that probate and title

documents to be produced, it is not in dispute, that probate in respect of

the Will of Ramasamy was obtained and thereafter, they came to know

that only Suseela is the owner of the property and her Will is also

probated under Ex.R.8, which has been discussed by the learned

arbitrator.

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11. The main contention of the claimant is that the owner's

prerequisites contained in the contract has not been fulfilled, i.e., patta

has not been obtained. Therefore, the remaining sale consideration not

paid. The learned arbitrator has factually found that the respondents

have provided Town Survey Extract, which is normally issued in City. A

patta is a mere revenue document. It is not a document of title. The

nomenclature of revenue documents differs from place to place. Town

Survey Land Record, which is prevalent in major cities like Chennai,

which is like patta, has been handed over to the claimant as per the

agreement. Such being the position, the claimant sticking on to the

nomenclature of the document as per the agreement, indicate that they

are not intended to complete the transaction as agreed in the terms of the

contract, by paying remaining sale consideration or the payment as

agreed in the contract.

12. The learned arbitrator had considered the entire oral evidence

and the learned arbitrator has put a question to C.W.1 for which the

claimant has stated that only if the patta is given they are ready to

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complete the transaction and not otherwise. When the entire evidence

was analysed, it is found that the claimant was not ready and willing to

perform their part of the contract and they have no sufficient money

available in their account at any part of the time to pay the remaining sale

consideration or the remaining advance as agreed in the contract.

Pursuant to entering into the contract, they cannot take advantage of a

particular clause in the agreement for insisting the patta for ever. In other

words such insistence is just like creating permanent encumbrance over

the property under the pretext of the agreement. The learned arbitrator

has in fact considered the entire aspects and rejected the claim.

13. The arbitrator being the final Judge of facts, this Court cannot

reappreciate the entire evidence, as an appellate Court. When the learned

arbitrator has appreciated the entire facts placed before him and recorded

a finding based on the facts, the same cannot be interfered by the Court

under section 34 of the Arbitration and Conciliation Act on the ground

that the terms of the contract has not been interpreted by the learned

arbitrator. The entire dispute is in the nature of specific performance of

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the contract. The learned arbitrator has considered the entire evidence

and weighed both sides evidence and found that the claimant is not ready

and willing to perform his part of the contract. The facts also show that

TSLR patta already given. Therefore, when the learned arbitrator has

taken a plausible view by taking into consideration all relevant materials

and passed the award, this Court is of the view that such an award

cannot be interfered.

14. In this regard, the Division of the this Court in Executive

Director [TN&P] Indian Oil Corporation Limited Vs. H.Thiagaraj

reported in 2021 SCC OnLine 2864 has held as follows :

7. “It is elementary that the arbitral tribunal is the

best judge of the quality and the quantity of the evidence

before it on the basis of which it allows a head of claim.

The arbitral tribunal may not have been satisfied with the

material that was produced, but reckoned that “rough and

ready figure' would be appropriate for 11 employees. Apart

from the fact that the matter was within the exclusive

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domain of the arbitral tribunal and cannot be regarded as

an error of jurisdiction, the award of the quantum does not

shock the conscience of the Court nor does it appear to be

opposed to any public Policey.

8. The challenge on such count received the due

attention of the Court of the first instance as the judgment

and order impugned refers to the Hodgkinson's principle

and the acceptance thereof, inter alia, in the judgement of

Associate Builders [2015 [3] SCC 49].

Therefore, when the award has been passed considering the relevant

materials, such an award cannot be interfered unless there is patent

illegality and the award is opposed to public policy of India. Therefore,

merely because some findings recorded by the arbitrator in some of the

paragraphs, as pointed out by the learned Senior Counsel, there may be

other views also possible, that cannot be at any stretch of imagination

falls within the ambit of patent illegality, which goes to the root of the

matter. In other words, the entire dispute revolve around the

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performance of the obligation on both sides. Having entered into a

contract for purchase of a property in the year 2013 and paying just

Rs.one lakhs as advance, without exhibiting any readiness or willingness,

one cannot take advantage of the contract for years together. Therefore,

this Court do not find any of the grounds made out under section 34 of

the Arbitration and Conciliation Act to interfere with the well reasoned

award of the arbitrator.

15. Accordingly , this Original Petition is dismissed.

13.09.2021

vrc

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N. SATHISH KUMAR, J.

vrc

Order in:

ARBITRATION ORIGINAL PETITION No.47 OF 2021

13.09.2021

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