Rajasthan High Court
Marshal Sharma S/O Late Shri ... vs M/S Spytech Buildcon Private ... on 9 October, 2023
Bench: Pankaj Bhandari, Bhuwan Goyal
[2023:RJ-JP:26776-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Miscellaneous Appeal No. 2291/2022
1. Marshal Sharma S/o Late Shri Keshav Dev Sharma,
Resident Of Keshav Pearl Palacia, Plot No. 31, Takhteshahi
Road, Kanota Bagh, Jaipur.
2. Arvind Sharma S/o Late Shri Keshav Dev Sharma,
Resident Of Keshav Pearl Palacia, Plot No. 31, Takhteshahi
Road, Kanota Bagh, Jaipur.
3. Jitendra Sharma S/o Late Shri Keshav Dev Sharma,
Resident Of Keshav Pearl Palacia, Plot No. 31, Takhteshahi
Road, Kanota Bagh, Jaipur.
----Appellants
Versus
M/s Spytech Buildcon Private Limited, Geetash Class Of Pearl, K-
48-49, L/543, Income Tax Colony, Tonk Road, Jaipur Through Its
Director Shri Praveen Jain S/o Shri G.c. Jain, Resident Of 602,
Pearl Pleasure, B-134, Rajendra Marg, Bapu Nagar, Jaipur.
----Respondent
For Appellant(s) : Mr. Maneesh Sharma, Adv.
Mr. Shreyansh Sharma, Adv.
For Respondent(s) : Ms. Sonal Singh, Adv. for Mr. Alok
Garg, Adv.
HON'BLE MR. JUSTICE PANKAJ BHANDARI
HON'BLE MR. JUSTICE BHUWAN GOYAL
Judgment
Reserved on 05/10/2023
Pronounced on 09/10/2023
(Per Hon'ble Pankaj Bhandari, J)
1. Claimants/appellants have preferred this Civil Misc.
Appeal under Section 37(1)(c) of the Arbitration and Conciliation
Act, 1996 read with Section 13(1A) of the Commercial Courts Act,
2015 against the Order dated 24.06.2022 passed by Commercial
Court No.2, Jaipur Metropolitan-II, Jaipur, whereby objection
[2023:RJ-JP:26776-DB] (2 of 7) [CMA-2291/2022]
application filed by the appellants/claimants under Section 34 of
Arbitration and Conciliation Act, 1996 challenging the Award dated
15.04.2019 was rejected.
2. It is contended by counsel for the claimants/appellants
that a Development Agreement (hereinafter referred to as
'agreement') was entered into between the appellants and the
respondent on 03.09.2009. As per the agreement, the developer
was to construct flats, 62% of the constructed area was to be
retained by the owner and 38% was to be given to the developer.
It is contended that certain disputes cropped-up between the
parties and the same were settled under mediation by the
Mediator on 20.09.2014. In the Award, following arbitral question
was framed by the Arbitrator:-
"Whether the excess area after the division of the
share of building according to the agreement dated
03.09.2009 is 415.00 sq. ft. or more than that
lying in the share of M/s. Spytech Buildcon Pvt.
Ltd? If Yes, what amount is to be paid by M/s.
Spytech Buildcon Pvt. Ltd. to the owners pertaining
to this excess area or in alternative, whether in
case if owners are ready to purchase the areas
from M/s. Spytech Buildcon Pvt. Ltd. including the
excess area, what amount is to be paid by the
owners to M/s. Spytech Buildcon Pvt. Ltd".
3. It is argued that the appellant-owner quoted the rate
per sq. ft @ Rs.15,000/-, whereas the developer quoted the rate
@ 5,500/- per sq. ft. The Arbitrator took the middle path and
determined the rate @ Rs.10,000/- per sq. ft. It is also argued
that there was no document or material to arrive at the conclusion
with regard to rate per sq. ft. It is also contended that a fixed
[2023:RJ-JP:26776-DB] (3 of 7) [CMA-2291/2022]
deposit of Rs.50 lakh was lying with the appellants. Learned
Arbitrator while calculating the share of excess area of 415 sq. ft.
with the developer, valued it @ Rs.41,50,000/- and adjusted with
the amount lying with the appellants and directed the appellants
to refund an amount of Rs.8,50,000/- to the developer. It is
contended that there was no counter claim by the respondent and
the Arbitrator has erred in setting off the amount lying in fixed
deposit and has further erred in directing the appellants to refund
the amount of Rs.8,50,000/- and on non-payment, to pay interest
thereon. It is also contended that as per the terms of the
agreement, all dues towards the State authorities was to be
shared in the ratio of 62:38. State authorities have demanded
money and the documents pertaining to the same were on record,
however, learned Commercial Court in the impugned order has
mentioned that no documents have been produced before the
Court.
4. It is contended by counsel for the appellants that the
Award is patently illegal and such ground is available under the
statue for setting aside a domestic Award. It is contended that the
decision of the Arbitrator is perverse and irrational, hence, the
same should not have been affirmed by the Commercial Court. In
this regard, counsel for the appellants has placed reliance on Patel
Engineering Ltd. Vs. North Eastern Electric Power Corporation Ltd.
(2020) 7 SCC 167. It is also contended that it is not permissible
for an Arbitrator to travel beyond the terms of reference. If award
goes beyond reference or there is an error apparent on face of
award, it would be open to court to interfere with such award.
[2023:RJ-JP:26776-DB] (4 of 7) [CMA-2291/2022]
Reliance in this regard has been placed on MSK Projects India (JV)
Ltd. Vs. State of Rajasthan & Anr. (2011) 10 SCC 573.
5. Learned counsel appearing for the respondent has
opposed the appeal. It is contended that Arbitrator has decided
the dispute which was referred to him. Arbitrator has come to the
conclusion that 415 sq. ft. excess area was lying with the
respondent. On the basis of last registry of that area, Arbitrator
has valued the excess area @ Rs.41,50,000/-. It is contended that
the Arbitrator has passed the Award on the basis of material
available and the learned Commercial Court has upheld the Award.
There is concurrent finding of facts and the scope of Section 37 of
Arbitration Act is limited.
6 Counsel for the respondent in this regard has placed
reliance on U.H.L. Power Company Ltd. Vs. State of Himachal
Pradesh (2022) 4 SCC 116, Heera Singh Vs. State of Rajasthan
AIR 2007 Raj. 213, Navodaya Mass Entertainment Ltd. Vs. JM
Combines (2015) 5 SCC 698, Swan Gold Mining Ltd. Vs.
Hindustan Copper Ltd. (2015) 5 SCC 739.
7. It is also contended by counsel for the respondent that
during pendency of the Arbitration proceedings, Arbitrator had
retained a cheque of Rs.50 lakh vide order dated 19.01.2015.
Thus, Rs.50 lakh was retained in the Arbitration proceedings and
the Arbitrator had all rights to adjust the amount of excess area
with the cheque which was with the appellants. It is contended
that since the security amount was retained by the order of
Arbitrator, he had the jurisdiction to deal with the amount while
passing the Award. Counsel for the respondent in this regard has
[2023:RJ-JP:26776-DB] (5 of 7) [CMA-2291/2022]
placed reliance on MMTC Ltd. Vs. Vedanta Ltd. AIR 2019 SC
1168.
8. It is also contended that respondent has already
submitted an indemnity bond with the appellants and he is bound
to honour the said bond, in case of dues outstanding towards the
Government Agency.
9. We have considered the contentions and have perused
the Award as well as the order passed by the Commercial Court.
10. It is evident that prior to the Arbitration proceedings,
the disputes had cropped up between the parties, which were
referred to mediation and certain issues were settled on
20.09.2014 by the Mediator. The only dispute which was referred
to the Arbitrator was as to whether there is any excess area of
415 sq. ft. with the developer and if yes, as to what amount is to
be paid by the developer to the owner. In this regard, learned
Arbitrator had come to the conclusion that excess area of 415 sq.
ft. was in possession of the developer. No evidence was led by
both the parties with regard to the present rate of per square feet
area at Takht-e-Shahi Road, Jaipur. Therefore, the Arbitrator
looking to the DLC rate of the land, the luxurious furnishings,
finishings and facilities of the flat considered the rate @
Rs.10,000/- per sq. ft. and accordingly, came to the conclusion
that the developer has excess area worth Rs.41,50,000/-.
11. Since Arbitrator is a person who is appointed by
consent of the parties as held by the Apex Court, the decision of
an Arbitrator is binding on the parties and the power to set aside
the Award can be exercised only in cases where the Court finds
that the arbitral award is on the face of it erroneous or patently
[2023:RJ-JP:26776-DB] (6 of 7) [CMA-2291/2022]
illegal or in contravention of the provisions of the Act. The Apex
Court in Swan Gold Mining Ltd. (supra) has held that the Court
shall not ordinarily substitute its interpretation for that of the
Arbitrator and that the Arbitrator appointed by the parties is the
final judge of the facts. The finding of facts recorded by him
cannot be interfered with on the ground that the terms of the
contract were not correctly interpreted by him. In the present case
in hand, the finding of the learned Arbitrator is a finding of fact
which has been upheld by the Commercial Court, hence, we do
not find any error in the calculation arrived at by the learned
Arbitrator and the objection of the appellant on this ground is not
sustainable.
12. The next objection to the Award raised by the
appellants was that the Arbitrator has directed the appellant to
set-off Rs. 41,50,000/- with the security deposit of Rs.50 lakh
retained by them in the arbitration proceedings. It is contended
that such was not the terms of reference and the Award
tantamounts to allowing the counter-claim whereas, there was no
counter-claim by the respondent in the present case.
13. We are of the considered view that such an objection
also cannot be raised for the very reason that in the same
arbitration proceedings, Rs.50 lakh was directed to be retained by
the appellants as security vide order dated 19.01.2015. The order
was passed by the Arbitrator and thus, the Arbitrator had all the
rights to direct the appellants to set-off Rs.41,50,000/- from the
amount retained by them and refund Rs.8,50,000/- to the
developer. Such an Award passed by Arbitrator cannot be said to
be beyond the terms of reference.
[2023:RJ-JP:26776-DB] (7 of 7) [CMA-2291/2022]
14. Apex Court in MMTC Ltd. (supra) has held that while
interpreting the terms of a contract, the conduct of parties and
correspondences exchanged would also be relevant factors and it
is within the arbitrator's jurisdiction to consider the same. In the
present case, this cheque amount was retained by the claimants in
furtherance of the order of the Arbitrator, thus, the Arbitrator was
entitled to pass an order with regard to set-off of the amount
payable by the developer against the amount retained by the
appellants. Thus, there is no error in the Award and learned
Commercial Court has also not committed any error in dismissing
the application under Section 34 of the Arbitration and Conciliation
Act, 1996. Judgments cited by counsel for the appellants on facts
have no applicability to the present case.
15. We do not find any force in the present Civil Misc.
Appeal and the same is accordingly, dismissed.
16. Stay application stands disposed.
(BHUWAN GOYAL),J (PANKAJ BHANDARI),J
CHANDAN /
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