Madras High Court
Truliv Properties And Services Private ... vs C.Ravishankar on 6 October, 2025
Author: N. Anand Venkatesh
Bench: N. Anand Venkatesh
2025:MHC:2307
2025:MHC:2307
Arb O.P(COM.DIV.) No.353
of 2025 and A No.3025 of
2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 25-09-2025
DATE OF DECISION : 06-10-2025
CORAM
THE HONOURABLE MR JUSTICE N. ANAND VENKATESH
Arb O.P(Com.Div.) No.353 of 2025
AND
Appln No.3025 of 2025
TRULIV Properties and Services Private Limited
represented by its Authorised Signatory
Mr.T.Rohit Reddy
Co-Founder and CEO
1st Floor, Khivraj Complex, 480, Anna Salai
Nandanam, Chennai 600 035 Petitioner(s)
Vs
C.Ravishankar
Plot No.5, Chinappa Nagar
Chennai 600 056 Respondent(s)
Arb O.P(COM.DIV.) No. 353 of 2025
PRAYER
a) To set aside the Arbitration Award dated 31.05.2025 passed by the Ld.Sole
Arbitrator, except in so far it:
i) Directs the Respondent to pay a sum of Rs.32,40,000/- to the Petitioner.
ii) Permits the Petitioner to take back furnishing items provided by the
Petitioner.
b) To modify the portion of the Arbitral Award dated 31.05.2025 passed by the
1
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Learned Sole Arbitrator, as mentioned in prayer (a), by awarding interest on the
sum of Rs.32,40,000/- 18 percent p.a. from 12.07.2019 till date of realization.
c) To direct the Respondent to pay the costs.
A No. 3025 of 2025
PRAYER
To grant an order of stay of operation of the Award dated 31.05.2025 passed by
Mr.V.Nallasenapathy, Advocate, Sole Arbitrator, pending disposal of the
aforesaid Arb.O.P before this Hon'ble Court.
For Petitioner(s) : Mr.Sathish Parasaran
Senior Counsel for
Mr.G.Vivekanand
For Respondent(s) : Set Ex parte
ORDER
This petition has been filed under Section 34 of the Arbitration and
Conciliation Act, 1996 (for brevity, hereinafter referred to as “the Act”) against
the arbitral award dated 31.05.2025 passed by the sole Arbitrator.
2. The case of the petitioner is that the respondent is the absolute owner
of 20 residential flats in a project known as 'Sobha Serene'. After negotiation,
the petitioner and the respondent entered into a lease deed dated 12.07.2019 in
respect of all the 20 flats. The lease was for a period of five years commencing
from 11.07.2019 to 30.06.2024. The monthly rent was fixed at Rs.5,40,000/-
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calculated at the rate of Rs.27,000/- per flat. The petitioner has to use the
properties as service apartments and the petitioner was also given the right to
sub-lease the apartments to the tenants identified by the petitioner. The
petitioner has to do the furnishing and fittings, which are described in the
Annexure-A. The petitioner must also pay the refundable security deposit of a
sum of Rs.32,40,000/- to the respondent at the time of handing over of vacant
possession or the termination or expiry of the lease period, whichever is earlier.
The agreement also contained an arbitration clause at Clause 23, where it was
agreed that all disputes/differences arising out of the lease deed will be referred
to and resolved through arbitration.
3. Pursuant to the above agreement, the petitioner paid the interest free
refundable security deposit of a sum of Rs.32,40,000/-. The petitioner also paid
a sum of Rs.3,18,600/- including TDS towards brokerage commission. The
petitioner purchased the furniture and fixtures for all the 20 flats inclusive of
the hardware items worth Rs.1,77,086/-. Thus the petitioner had invested huge
sums in the project for the development of the flats as service apartments.
4. The petitioner received a legal notice dated 31.08.2019 from M/s
Sobha Developers Limited about a joint venture agreement entered into between
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Sobha Developers Limited and the respondent and that there were certain
disputes amongst them and it was pending adjudication before the Arbitral
Tribunal (for short, “the AT”). It was further stated that an interim order was
passed by the AT on 27.12.2016 restraining the respondent from in any manner
selling or creating any encumbrance in the properties. A copy of the interim
order was also annexed along with the notice.
5. On receipt of the above notice, a notice was given by the petitioner to
the respondent on 28.09.2019 seeking clarification on the order of injunction
and further sought for the refund of all the costs incurred by the petitioner in
connection with the renovation of the flats. Though this notice was delivered to
the respondent on 01.10.2019, no reply was forthcoming and the entire
investment made by the petitioner got locked into this project. The petitioner
felt that they were cheated and hence gave a police complaint before the
concerned jurisdictional police. The respondent was called for enquiry and he
conceded to the fact that an interim order was in fact passed by the AT, and the
respondent therefore agreed for termination of the lease deed and also
undertook to return back the security deposit of a sum of Rs.32,40,000/- on or
before 30.01.2020. Based on this undertaking, the petitioner also stopped
renovation of the flats and was expecting the respondent to honour the
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undertaking by refunding the amount and taking back possession of the flats.
6. The respondent issued a notice dated 14.09.2020 by making baseless
allegations and in this notice, the respondent rescinded to any liability that arose
from the lease deed and refused to return back the amount lying as security
deposit. The respondent was also attempting to interpret the interim order
passed by the AT. According to the petitioner, this stand was taken by the
respondent only to renege on his obligation under the agreement and wriggle
out of the liability.
7. The petitioner invoked the arbitration clause and nominated an
Arbitrator through notice dated 04.05.2021. Since there was no response, a
petition came to be filed before this Court in Arb O.P.(Com.Div.)No.44 of 2023
and the sole arbitrator was appointed.
8. After constitution of the AT, the petitioner filed a claim petition seeking
for refund of the refundable deposit, reimbursement of costs spent towards
furnishing and renovation, compensation towards brokerage fees, compensation
towards damages, along with interest.
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9. The respondent entered appearance and filed a statement of defence by
making the same bald allegations and also took a stand that the petitioner is
liable to pay the arrears of rent from 11.09.2019 to 31.05.2023 to the tune of
Rs.2,32,20,000/-.
10. The learned Arbitrator framed the following issues:-
“(1) Whether the minutes of Arbitral Tribunal of three
Hon'ble retired Judges dated 27.12.2016 between the
Respondent and one Shoba Limited would have any effect
on the lease contract between the parties herein?
(2) Whether the termination of the lease deed by the
Claimant is valid in law?
(3) Whether the lease as per the terms of the Lease Deed
dated 12.07.2019 is deemed to have commenced between
the Claimant and the Respondent?
(4) Whether Section 108(q) of Transfer of Property Act,
1882 is applicable in this case?
(5) Whether possession was delivered to the Respondent
subsequent to the termination of lease by the Claimant?
(6) Whether the Claimant is entitled to refund of the
Security Deposit of Rs.53,60,291/- inclusive of interest
with an additional interest calculated at the rate of 18% per
annum from 26.05.2023 till the date of realization of the
amounts?
(7) Whether the Claimant is entitled to Rs.5,42,408/-
towards reimbursement of costs incurred for furnishing the
subject premises inclusive of interest with an additional
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interest calculated at the rate of 18% from 26.05.2023 till
the date of realization of amounts?
(8) Whether the Claimant is entitled to refund of
Rs.5,27,095/- towards brokerage fee inclusive of the
interest with an additional interest calculated at the rate of
18% from 26.05.2023 till the date of realization of
amounts?
(9) Whether the Claimant is liable to pay arrears of rent
from 11.09.2019 to 31.05.2023 to the extent
Rs.2,32,20,000/- as claimed in the counter claim statement
of the Respondent?
(10) Whether the Claimant is entitled for damages to the
extent of Rs.10,00,000/- as claimed in the claim statement?
(11) Whether the parties are entitled to any other relief?”
11. One witness was examined on the side of the petitioner/Claimant as
CW1 and the respondent examined himself as RW1. Exhibits C1 to C16 were
marked on the side of the petitioner and Exhibits R1 to R12 were marked on the
side of the respondent.
12. The learned Arbitrator, through award dated 31.05.2025, came to the
following conclusions:-
“(a) the Claimant is liable to pay Rs.1,99,80,000/- (Rupees
one crore ninety nine lakhs and eighty thousand only) to the
respondent towards the counter claim after adjustment of
security deposit;
(b) the claimant is liable to pay interest @ 10% per annum
on the above said amount from the date of award till
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realization;
(c) the Claimant is entitled to take back the additional
furnishing items provided by them;
(d) the Claimant is directed to handover the possession of
the subject premises to the Respondent by delivering the
keys and EB cards on or before 15.06.2025;
(e) all the interim orders passed by this tribunal stands
vacated;
(f) the Claimant and the Respondent to pay the arbitrator,
the balance fee of Rs.1,77,255/- each. After receipt of
payment from the parties the signed copy of the award will
be sent to the parties.”
13. Aggrieved by the above award, the present petition has been filed
before this Court.
14. Notice was issued to the respondent and since the respondent neither
appeared in person nor through counsel, he was set ex parte by an order dated
22.07.2025.
15. Heard the learned Senior Counsel for petitioner and carefully perused
the materials available on record.
16. The first issue that was taken into consideration by the learned
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Arbitrator pertained to the effect of the order passed on 27.12.2016 by the AT
(Ex.C16) and whether it had an impact/effect on the contract between the
parties. The order passed by the AT dated 27.12.2016 is based on a written
undertaking given by the respondent in this proceedings to the effect that he will
not sell/encumber/alienate the flats given to him without further orders from the
AT. Thus, it is quite apparent that the AT did not pass orders on merits and the
AT merely recorded the undertaking given by the respondent and treated it as an
interim arrangement pending the final decision by the AT. The proceedings have
been signed by the presiding Arbitrator.
17. The sole Arbitrator, by relying upon Section 31 of the Act, has come
to a conclusion that since all the members did not sign the proceedings, the
proceedings do not have any effect and therefore, they will not have a bearing
on the lease agreement entered into between the parties.
18. The above finding of the learned Arbitrator, on the face of it, is illegal.
Section 31 of the Act deals with form and contents of arbitral award. The
proceedings dated 27.12.2016 cannot even be considered to be an order, since
the AT has merely recorded the undertaking given by the respondent. Therefore,
to read Section 31 of the Act into the said proceedings and giving a finding that
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the proceedings are non est in the eye of law, is clearly a perverse finding. It is
quite surprising that such a finding has been rendered by the learned Arbitrator,
even though the respondent has not pleaded to that effect or argued that the
interim order is non est in the eye of law. In fact, the respondent in the proof
affidavit, has relied upon Section 29 of the Act and Section 29(2) makes it very
clear that the question of procedure will be decided by the presiding Arbitrator
and hence, the proceedings dated 27.12.2016 were recorded and signed by the
presiding Arbitrator. The above finding of the learned Arbitrator is violative of
the principles of natural justice, since this point was not raised and the petitioner
never had an opportunity to put forth their arguments on the issue that has been
raised by the Arbitrator for the first time while passing the award. Therefore,
this finding falls foul under Section 34(2)(d)(iv) of the Act. The above finding
is also afflicted with patent illegality under Section 34(2A) of the Act, since the
finding in the final award is completely contrary to the finding that was given
while dealing with the application filed under Section 17 of the Act, where the
sole Arbitrator has found that the undertaking given before the AT and which
was recorded in the proceedings, binds the respondent. Thus, the finding that
was rendered at the time of passing the interim order and the finding that was
rendered at the time of passing the final award are mutually contradictory. The
above perverse finding is also irrational, since the same Arbitrator could not
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have rendered one finding at the time of passing the interim order and a
completely conflicting finding at the time of passing the final award. Useful
reference can be made to the judgment of the Apex Court in the case of
Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49.
19. Insofar as the second issue which deals with the termination of the
lease deed by the petitioner, the learned Arbitrator has given a finding that the
termination of lease by the petitioner is not legally valid.
20. In order to render the above finding, the learned Arbitrator has placed
reliance upon Section 106 of the Transfer of Property Act and Section 49 of the
Registration Act. Surprisingly, the respondent did not even raise these issues in
the pleadings. The learned Arbitrator has held that the lease deed in question is
an unregistered document and Section 49 bars the reception of such a document
and therefore, it cannot be admitted in evidence and hence, in the case on hand,
the contract of lease must be taken to be an oral agreement. Therefore, relying
upon Section 106(3) and (4) of the Transfer of Property Act, the learned
Arbitrator has given a finding that the party to such a contract must issue a
notice in writing or serve such notice in person expressing his intention to
determine the contract. Since the petitioner gave only a ten day notice, it is not
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in line with Section 106(3) and therefore, the termination of lease is not legally
valid.
21. The above finding of the learned Arbitrator, on the face of it, is
perverse. The finding of the learned Arbitrator has no legal basis, since the
learned Arbitrator has presumed that there is an oral agreement when in fact,
there was a written agreement between the parties. If according to the learned
Arbitrator, the lease deed is inadmissible in evidence, the learned Arbitrator
ought to have seen whether it can be relied upon for collateral purpose under the
proviso to Section 49 of the Registration Act. That would have enabled the
learned Arbitrator at least to decide upon the nature and character of possession
of the property. Instead the Arbitrator has re-written the contract itself, which is
a patent illegality, which falls foul under Section 34(2A) of the Act. Such a
finding also shocks the conscience of this Court and therefore, the finding falls
foul of Section 34(2)(d)(iv) of the Act.
22. In the light of the finding given for issue no.2, the finding that was
rendered for issue no.4 also suffers from patent illegality, since the learned
Arbitrator has applied Section 108(q) of the Transfer of Property Act on the
assumption it was an oral agreement between the parties. Surprisingly, after
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having rendered a finding, the learned Arbitrator also analyses the relevant
clauses in the lease deed and comes to a conclusion that Section 108(q) of the
Transfer of Property Act will be applicable and renders a finding in favour of
the respondent. Section 108 starts with a categoric expression that “in the
absence of a contract to the contrary”, the rights and liabilities of the lessor and
lessee will flow from Section 108 of the Transfer of Property Act. In the case on
hand, there was a written contract between the parties and as per the terms of
the agreement (Ex.C2), the respondent was supposed to obtain all necessary
permission from the concerned authorities and Association in order to allow the
petitioner to use and occupy the properties as service residency. In the case on
hand, the respondent entered into an agreement with the petitioner in the teeth
of an undertaking given before the AT that the respondent will not encumber the
properties in any manner. Under such circumstances, Section 108(q) will not
apply to the instant case.
23. The sole arbitrator also failed to take note of the distinction between
the lease commencement date and the rent commencement date, which was
clearly explained by CW1. As per the lease deed, sixty days time was given for
furnishing the flats. But, however, it all came to a grinding halt due to the
interim order passed by the AT and therefore, the parties did not go to the next
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step of commencement of payment of rent.
24. The finding of the learned Arbitrator is in violation of the substantive
law and it disregards the most basic notions of justice and it falls foul of
Section 34(2)(d)(ii) of the Act. Thus the finding rendered for issue no.4 is also
unsustainable.
25. Insofar as the third issue is concerned, the Arbitrator has considered
as to whether the lease is deemed to have commenced between the petitioner
and the respondent. The Arbitrator has held that the lease has commenced, since
Ex.C16 order does not have any effect and therefore the respondent was entitled
to execute the lease agreement in favour of the petitioner. This finding is
perverse and it suffers from patent illegality due to the reasons assigned by this
Court for issue no.1.
26. Insofar as issue nos.5 to 9 are concerned, they can be taken up
together, since they are interrelated. The petitioner has paid the security deposit
of a sum of Rs.53,60,291/-. The respondent was claiming for payment of arrears
of rent from 11.09.2019 to 31.05.2023. Even though possession was handed
over to the petitioner, it was at the stage of furnishing and fittings to be done for
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the 20 flats and everything came to a grinding halt due to the interim order
passed by the AT, which was informed to the petitioner by the builder at a later
point of time. The learned Arbitrator held that the petitioner is entitled for the
refund of the security deposit only to an extent of Rs.32,40,000/-, since that was
the amount that was paid under Clause 7 of the agreement. Having held so, for
the ninth issue, the learned Arbitrator holds that the petitioner is liable to pay
arrears of rent from 11.09.2019 to 31.05.2023, which was the counter claim
made by the respondent. The learned Arbitrator has once again relied upon
Section 108(q) of the Transfer of Property Act to come to this conclusion. This
Court has already held that the said provision will not apply to the facts of the
present case, since there is a contract to the contrary and the incidence of
payment of rent will commence only after the respondent completes his
obligation to get the necessary permission of the authority and thereafter allow
the petitioner to use and occupy the property as a serviced residency. The
learned Arbitrator failed to take note of the fact that the commencement of
payment of rent starts from 11.09.2019 and whereas, the petitioner had in fact
terminated the lease on 28.09.2019 (Ex.C8). Therefore, there was no occasion
for the petitioner to occupy the premises and the stage of payment of rent was
never reached. The learned Arbitrator directing the petitioner to pay rents to the
respondent for the period from 11.09.2019 to 31.05.2023 is more in the nature
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of giving premium for the illegality committed by the respondent by violating
the undertaking given before the AT and concealing the said fact and entering
into a lease agreement with the petitioner. The conclusion arrived at by the
learned Arbitrator to the effect that the petitioner has to pay arrears of rent for
the period from 11.09.2019 to 31.05.2023 suffers from patent illegality and it is
contrary to the terms of the agreement and such finding also shocks the
conscience of this Court. In view of the same, the order passed by the learned
Arbitrator allowing the counter claim made by the respondent falls foul of
Section 34(2)(d)(ii) and Section 34(2A) of the Act.
27. The other issue pertaining to reimbursement of costs incurred by the
petitioner towards purchase of hardware items and modular kitchen plywood
and also the expenses incurred towards transportation charges, administration
and document expenses is concerned, Ex.C6, which are two tax invoice, will
have to be necessarily acted upon and the petitioner will be entitled for a total
sum of Rs.1,77,086/-.
28. Insofar as the issue regarding refund of the brokerage fees, Ex.C4
proves that the petitioner has paid a sum of Rs.3,18,600/- to the consultant. The
very agreement that was entered into by the respondent with the petitioner is
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illegal and is in violation of the undertaking given by the respondent before the
AT. However, the Arbitrator has chosen to disregard Ex.C16, which has already
been held by this Court to be patently illegal. Therefore, the brokerage expense
incurred by the petitioner is also liable to be refunded by the respondent.
29. Insofar as the tenth issue which deals with the payment of damages,
the petitioner has taken a stand that the respondent has misled the petitioner and
made the petitioner enter into the lease agreement by concealing the
undertaking given before the AT and therefore, the petitioner has been put to
loss and hardship, as a result of which the petitioner is seeking for payment of
damages.
30. It is now too well settled that where a person has sustained loss by
reason of breach of contract, he is, so far as money can do it, be placed in the
same situation, with respect to damages, as if the contract had been performed.
In the instant case, it may not be possible to assess the damages with certainty.
However, there is a breach of contract and the wrong-doer cannot be set free
without paying the damages. Therefore, the Court can always make reasonable
assessment and fix a reasonable amount towards damages. In short, the Court is
ultimately required to apply its mind in ascertaining whether the breach of
contract operates as an effective cause of the loss claimed.
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31. Considering the fact that the petitioner was undergoing mental agony
from the year 2019 onwards due to the act of the respondent, which is tainted
with moral turpitude, the petitioner is certainly entitled for payment of damages
due to the breach of contract and which contract is non est in the eye of law,
since it was done in violation of the undertaking given before the AT and
without revealing the truth to the petitioner.
32. This Court is inclined to fix a sum of Rs.2,50,000/- towards damages.
The learned Arbitrator went wrong in not awarding any amount under this head
and the Arbitrator .was patently wrong in denying this relief, on the premise that
the proceedings of the AT dated 27.12.2016 need not be acted upon.
33. The upshot of the above discussion leads to the only conclusion that
the award passed by the sole Arbitrator dated 31.05.2025 falls foul of Section
34(2)(b)(ii) and Section 34(2A) of the Act and this Court holds that the
petitioner is entitled for the following reliefs:-
(a) For refund of a sum of Rs.32,40,000/- paid as refundable security
deposit with interest at the rate of 12% per annum from 08.10.2019
till the date of actual realization;
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(b) For reimbursement of cost to the tune of Rs.1,77,086/- with
interest at the rate of 12% per annum from 08.10.2019 till the date of
actual realization;
(c) For refund of brokerage fee of Rs.3,18,600/- with interest at the
rate of 12% per annum from 08.10.2019 till the date of actual
realization;
(d) For compensation towards damages quantified at Rs.2,50,000/-.
34. In the result, this original petition is allowed in the above terms with
costs of Rs.2,50,000/- payable by the respondent to the petitioner. Consequently,
Application No.3025 of 2025 is closed.
06-10-2025
Index:Yes
Speaking order
Internet:Yes
Neutral Citation:Yes
ss
To
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Arb O.P(COM.DIV.) No.353
of 2025 and A No.3025 of
Mr.C.Ravishankar
Plot No.5, Chinappa Nagar
Chennai 600 056
N.ANAND
VENKATESH J.
ss
Order in Arb
of 2025
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Arb O.P(COM.DIV.) No.353
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06-10-2025
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