Madras High Court

Vikas Chordia vs M/S.Bala Abirami Builders And ... on 26 April, 2022

Arb. O.P.(Com.Div.)No.201 of 2022

IN THE HIGH COURT OF JUDICATURE AT MADRAS

Dated : 26.04.2022

CORAM

THE HONOURABLE Mr.JUSTICE M.SUNDAR

Arb. O.P.(Com.Div.)No.201 of 2022

Vikas Chordia
Rep. by its Power Agent
T.Kailassh Chrodia
No.33, Puram Prakasam Road,
Balaji Nagar, Royapettah,
Chennai-14. ... Petitioner
vs.

1. M/s.Bala Abirami Builders and Developers Private Ltd.,
Rep. by its Managing Director
Abirami Commercial Centre
No.16/16A, 3rd Cross Street,
Nehru Nagar, Kottivakkam
Chennai-600 042.

2. M/s.Abirami Housing (P) Ltd.,
Rep. by its Director
16, 3rd Cross Street, Nehru Nagar
Kottivakkam, Chennai-41. ... Respondents

Arbitration Original Petition filed under Section 34(2) of the
Arbitration and Conciliation Act, 1996 praying
(a) to set aside the Arbitral Award dated 18.10.2021 served on the
petitioner on 20.10.2021, bearing O.P.No.666 of 2011 passed by learned Sole

1/17
https://www.mhc.tn.gov.in/judis
Arb. O.P.(Com.Div.)No.201 of 2022

Arbitrator and by allowing the claim statement; and
(b) to direct the respondent to pay the costs.
For Petitioner : Mr.C.Umashankar

*****

ORDER

Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the

sake of convenience and clarity] has been presented in this Court on

18.11.2021 assailing an 'arbitral award dated 18.10.2021 bearing reference

O.P.No.666 of 2011' [hereinafter 'impugned award' for the sake of

convenience and clarity] made by an 'Arbitral Tribunal' [hereinafter 'AT' for

the sake of convenience and clarity] constituted by a sole Arbitrator who is a

former Hon'ble Judge of this Court.

2. Captioned Arb OP is listed in the Admission Board and therefore,

the same was heard out, for Admission in accordance with 'The Madras High

Court (Arbitration) Rules, 2020' [hereinafter 'MHC Arb Rules' for the sake of

convenience and clarity] more particularly Rule 8 and clause 8.5 of Practice

Directions thereat. To be noted, MHC Arb Rules are a set of Rules made by

this Court in exercise of its powers under Section 82 of A and C Act.

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

3. In this order, from hereon and henceforth the petitioner in this

captioned Arb OP (claimant before AT) shall be referred to as 'land owner'

and respondents in the captioned Arb OP (respondents before AT) shall

collectively be referred to as 'builder' for the sake of convenience and clarity.

4. Factual matrix in a nutshell is that land owner owns a piece of land

in the city of Chennai along with two others; that two others sold their

undivided share in this piece of land; that land owner entered into a

development agreement i.e., a Joint Venture agreement with builder as

regards his 1/3rd undivided share; that for this purpose a preliminary

agreement dated 06.10.2006 followed by 'Joint Venture Agreement dated

18.10.2006' [hereinafter collectively 'primary contract' for the sake of

convenience and clarity] were executed between land owner and builder; that

the primary contract was operated, the builder developed the land, put up

residential flats therein and land owner's share was given to him; that land

owner alleged some deviations qua primary contract; that these alleged

deviations were subjected to disputations by builder leading to arbitrable

disputes; that primary contract admittedly contains a arbitration clause which

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

serves as an Arbitration Agreement between land owner and builder i.e.,

'Arbitration Agreement' within the meaning of Section 2(1)(b) read with

Section 7 of A and C Act; that arbitration agreement was triggered; that a

former Hon'ble Judge of this Court was appointed as Arbitrator; that there

was unfortunate demise of former Hon'ble Judge; that another former

Hon'ble Judge was replaced qua the demised sole Arbitrator and he made the

impugned award; that arbitrable disputes took the shape of a claim of a little

over 8.49 Crores with interest at the rate of 24% per annum towards

damages; that this damages for alleged breach of various conditions of

primary contract which turned inter alia on delay in completion of

construction, work not being done in accordance with the specifications,

non-adherence to the terms of primary contract, payments on account of

commission, shortfall in constructed area, sub-standard materials and non-

completion of pending works all of which were resisted by the builder inter

alia by denying the alleged breach and these disputations were

considered/adjudicated upon by AT; that vide impugned award, a sum of

Rs.10 Lakhs was awarded to land owner; that land owner was also given

liberty to sue for damages in the event of any action being taken by the

CMDA or Corporation of Chennai or Government of Tamil Nadu for

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

demolishing the flat; that land owner has presented the captioned Arb OP

under Section 34 of A and C Act in this Court assailing the impugned award;

that this Court is informed that builder has not presented any separate

petition under Section 34 of A and C Act assailing the impugned award.

5. Before proceeding further, this Court deems it appropriate to extract

and reproduce clause 8.5 of Practice Directions of MHC Arb Rules (already

alluded to supra) and the same reads as follows:

'8. Challenge to an award under Section 34 of the Act: 8.1 ......................

8.2 .....................

8.3 .....................

8.4 .....................

8.5 Proceedings under Section 34 of the Act shall be disposed of by a summary procedure'

6. The aforementioned clause is traceable to Fiza Developers case law

i.e., ratio laid down by Hon'ble Supreme Court in Fiza Developers and

Inter-Trade Private Limited Vs. AMCI (India) Private Limited reported in

(2009) 17 SCC 796, wherein Hon'ble Supreme Court made it clear that a

Section 34 legal drill is a one issue summary procedure. Hon'ble Supreme

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

Court also eluciditavely explained that 'one issue' does not mean that lis

should turn on one issue and an arbitral award being put to challenge before

a Section 34 Court itself is an issue. It is also to be noted that this Fiza

Developers principle was held to be a step in the right direction by Hon'ble

Supreme Court in Emkay Global case [Emkay Global Financial Services

Ltd. v. Girdhar Sondhi reported in (2018) 9 SCC 49]. This Section 34 Court

having set out the factual matrix and statutory procedural perimeter within

which this Section 34 legal drill of testing the impugned award will

perambulate reverts to what unfurled in the hearing in the Admission Board.

7. Mr.C.Umashankar, learned counsel for land owner in his campaign

against the impugned award, not withstanding very many averments and

several grounds in the petition in the captioned Arb OP made focussed

submissions on two points and they are as follows:

(a) The impugned award is perverse as it has given

land owner another avenue after a long adjudication;

(b) Impugned award has not correctly appreciated the

evidence before it regarding alleged breach of primary

contract;

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

8. This Section 34 Court carefully considered the two points that have

been urged in the light of case file, after giving its consideration to oral

arguments advanced in the hearing, comes to the conclusion that the

captioned Arb OP does not qualify for Admission and reasons i.e.,

dispositive reasoning are as follows:

(a) Captioned Arb OP on hand says that it has been

presented in this Court under Section 34(2) of A and C Act. In

other words, it does not mention sub-clauses i.e., grounds of

challenge with statutory specificity;

(b) The second point urged at best turns on patent

illegality which is now a ground available under sub-section

(2A) of Section 34 of A and C Act. Proviso to sub-section (2A)

makes it clear that re-appreciation of evidence is impermissible

in the case on hand. This Court is informed that there are two

witnesses on the side of land owner (claimant before AT) and

one witness on behalf of builder (respondent before AT). As

many as 55 documents were marked as exhibits on the side of

land owner and 31 documents were marked as exhibits on the

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

side of builder. After careful analysis of oral and documentary

evidence, Hon'ble AT vide impugned award has come to the

conclusion that no proof has been adduced by land owner for

the loss or damages sustained by him. On this basis, AT has

applied the case laws on this point i.e., case laws turning on

Section 73 of the Contract Act and has found it appropriate to

award damages to the tune of Rs.10 Lakhs. This is articulated

in paragraph Nos.111 and 112 of impugned award which read as

follows:

'111. Therefore except the ipsi dixi of the claimant's witness statement no proof has been adduced by the claimant for the loss or damages sustained by him. Therefore having regard to the principles laid down in above judgments and having regard to the lack of evidence on the side of the claimant, according to me the claimants are not entitled to claim the sum of Rs.3.52 crores as unliquidated damages at present.

112. However in my opinion the respondents cannot be allowed to go scot free without paying any compensation to the claimant for not having obtained the Completion Certificate and Sanctioned Plan. Admittedly Completion Certificate was not issued by the authorities as there was no sanctioned plan. As per the JVA and Construction

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

Agreement, the respondents are bound to construct the building as per the sanctioned plan and ought to have obtained completion certificate after the construction was over. CMDA has also issued demolition notice stating that there were violations in the construction and that notice has not been quashed. It is also admitted that even after handing over the possession in the year 2011, no attempt was made by the respondents to get Completion Certificate or to get sanctioned plan and the excuses said by the respondents that they were forced to deviate from the plan as per the request of the respondents and other flat owners have also requested to do certain constructions and therefore the plan was not sanctioned cannot be accepted. Admittedly the plan submitted by the respondents for construction of flats in the entire area was not approved by the authorities. Therefore the respondents should have taken steps to get the plan sanctioned before completing the construction. The respondents also should have been firm in not obliging to the demands of the flat owners and ought not to have constructed some constructions which would amount to deviations from the plan. Therefore I hold that the respondents must be held responsible for not having obtained Completion Certificate and Sanctioned Plan. As rightly submitted by the learned counsel for the claimant sword is hanging on them and at any time CMDA may take action and demolish the entire structure. Unfortunately the respondents also did not submit that they would take all

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

measures to get the plan approved and get Completion Certificate from the authorities. Taking into consideration of all these aspects I am of the opinion that the respondents are liable to pay the compensation to the claimant for the mental agony undergone by the claimant for reason of non- availability of Completion Certificate and Sanctioned Plan. It is not easy to arrive at an amount. The CMDA may proceed with the demolition for deviation in constructions or for not obtaining the completion certificate after the completion of construction or constructing the flats without sanctioned plan. The CMDA may give one more opportunity to the claimant to rectify the defects pointed out by CMDA and the claimant may also try to rectify the defects if possible. Therefore considering all these possibilities a sum of Rs.10 Lakhs would be reasonable in my opinion as compensation payable by the respondents to the claimant. The issue is answered accordingly.'

(c) The above will make it clear that the argument

predicated on appreciation of evidence is a non-starter owing to

proviso to sub-section (2A) of Section 34 of A and C Act. To be

noted, on the rival pleadings before it. AT framed 11 issues, this

is captured in paragraph No.85 of the impugned award and the

same reads as follows:

'85. On the basis of above pleadings the following

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

issues are framed:-

1) Whether the agent representing the claimant had a valid power to represent the claimant and initiate the present arbitration proceedings on the basis of the Power of Attorney dated 24.12.2012?

2) Whether the respondents have acted in consonance with the terms of the agreement dt. 6.10.2006 and 18.10.2006?

3) Whether the time was the essence of the contract and whether any waiver was made by the parties?

4) Whether the conduct of the parties has resulted in novation of the terms of the contract dt. 6.10.2006 and 18.10.2008 in writing or otherwise?

5) Whether the claimant and respondents have discharged their respective obligations under the contract?

6) Whether the claimant is entitled to seek alleged facilitation fee based on the letter dt. 5.5.2008 in the present arbitration proceedings?

7) Whether the respondents have adhered to the approved and sanctioned plan in putting up the construction in all aspects?

8) Whether there was any delay on the part of the respondents in completing the construction from the date of final approval?

9) Whether the respondents have obtained completion certificate for the project in dispute from the concerned

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

authorities?

10) Whether the claimant is entitled for relief as sought for in the claim statement?

11) To what relief the claimant is entitled?'

(d) The campaign against the impugned award largely

turns on issues 2 to 4 and the same have been answered in

paragraph Nos.86 to 99 of the impugned award. This Court

refrains itself from extracting and reproducing those paragraphs

as it will suffice to say that there is nothing to demonstrate

perversity in appreciation of evidence.

(e) As regards the argument of another avenue being made

available to land owner, it only enures to the benefit of land

owner as it preserves the rights of land owner if another

eventuality occurs. This Court is in the considered view that it

is in favour of land owner and this Court does not find any

substance in land owner finding fault with the same and

assailing the impugned award;

(f) Though not specifically argued, this Court deems it

appropriate to deal with Section 34(2)(b)(ii) of A and C Act i.e.,

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

Public Policy also. This Public Policy ground was elaborately

explained by Hon'ble Supreme Court in Associate Builders case

[Associate Builders Vs. Delhi Development Authority reported

in (2015) 3 SCC 49] and in Ssangyong principle [Ssangyong

Engineering and Construction Company Limited Vs. National

Highways Authority of India reported in (2019) 15 SCC 131]

principles qua Associate Builders case stood

elucidated/classified/varied and therefore, review on merits of

the matter is completely forbidden. In other words, review on

the merits of an award or review on the merits of the matter is

impermissible. This has been clearly set out by Hon'ble

Supreme Court in Ssangyong case law and the relevant

paragraphs are Paragraphs 34 to 36 which read as follows:

'34. What is clear, therefore, is that the expression “public policy of India”, whether contained in Section 34 or in Section 48, would now mean the “fundamental policy of Indian law” as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to “Renusagar” understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] .

35. It is important to notice that the ground for interference insofar as it concerns “interest of India” has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the “most basic notions of morality or justice”. This again would be in line with paras 36 to 39 ofAssociate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.

36.Thus, it is clear that 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 paras 18 and 27 of Associate Builders[Associate Builders v. DDA, (2015) 3 SCC 49 :

https://www.mhc.tn.gov.in/judis Arb. O.P.(Com.Div.)No.201 of 2022

(2015) 2 SCC (Civ) 204] , or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] . 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 [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] , as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.'

(g) A Section 34 legal drill has to be performed within

limited legal landscape sketched by sub-section 6A thereat

which have been elucidatively explained in a long line of case

laws. Section 34 of A and C Act itself is a default provision. It

is a delicate balance between the sanctity of 'finality of arbitral

award' and 'limited judicial intervention' ingrained in Sections

35 and 5 (respectively) of A and C Act on one side and judicial

review forming part of due process of law on the other side.

(h) To be noted, Section 34 of A and C Act is not an

appeal. It is not akin to a judicial drill under Section 96 of the

'Code of Civil Procedure, 1908 (Central Act V of 1908)'

[hereinafter 'CPC' for the sake of brevity]. It is not a revision. It