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2009(2) Supreme 749
SUPREME COURT OF INDIA
(From Madhya Pradesh High Court)
Lokeshwar Singh Panta and B. Sudershan Reddy, JJ.
M.P. Housing Board — Appellant
versus
Progressive Writers & Publishers — Respondents
Civil Appeal No. 1746 of 2009
(Arising out of SLP (C) No.15915 of 2006)
Decided on : 20-03-2009
(b) Arbitration Act, 1940 – Section 30 – Well settled that award of the arbitrator is ordinarily final – Courts hearing applications under Section 30 do not exercise any appellate jurisdiction – Reappraisal of evidence by the court is impermissible. (Para 18)
(2001) 6 SCC 347; (1989) 2 SCC 38; (2003) 7 SCC 396 – Relied upon.
(2004)8 SCC 689 – Distinguished.
(c) Indian Contracts Act, 1872 –Section 46 – Onus to plead and prove that time was of the essence of the contract is on the person alleging it. (Para 24)
(d) Arbitration Act, 1940 – Section 23 – In a reference made u/s 23, arbitrator’s power to determine the lis between the parties is much wider – The arbitrator has all the powers which the court itself would have in deciding the issues in the suit – Therefore the arbitrator’s power to frame an additional issue cannot be denied. (Para 26)
(1993)1 SCC 114 – Relied upon.
(e) Arbitration Act, 1940 – Section 30 – Award of an arbitrator should be read reasonably as a whole to find out the implication and the meaning thereof – Court can set aside an award only if there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous. (Para 28)
(1989)1 SCC 532; (1989)2 SCC 347 – Relied upon.
(f) Arbitration Act, 1940 – Section 30 – Legal misconduct – Comprises erroneous application of law constituting the very basis of the award and improper and incorrect findings of fact – These render the award invalid – At the same time court could not reappraise the evidences intrinsically – Such exercise of power which can be exercised by an Appellate Court, is alien to the scope and ambit of challenge of an award under the Arbitration Act. (Para 30)
(1994)6 SCC 485 – Relied upon.
Facts of the case :
1. On February 18, 1975 the M.P. Housing Board and Progressive Writers and Publishers, New Delhi entered into an agreement whereunder the Board agreed to construct a building called the ‘Hitavada Press Complex’ on the land admeasuring 33932 sq. ft. situated at T.T.Nagar, Bhopal.
2. The initial amount of Rs.14 lakhs was accordingly deposited by the depositor with the Board. However, the depositor failed to deposit the balance amount. In the meanwhile, the Board had paid the amounts from its own funds in order to complete the construction of the building.
3. The parties entered into the second building agreement dated May 4, 1977. The Board in terms of the second building agreement had paid the agreed sum to the Bank and obtained the original title deeds of the part of the plot admeasuring 19319 sq. ft only. However, the title deeds of the residual area were not handed over to the Board. The construction was completed by the Board.
4. The parties entered into third building agreement on May 31, 1980. The depositor did not comply with Clause 4 of the third agreement which required the payments to be made by 31st October, 1980.
5. Since the parties failed in arriving at any agreed settlement, the Board filed Suit for permanent injunction seeking a restraint against the depositor from disturbing their possession of the land and building and also sought a further restraint order restraining the depositor from demolishing sheds constructed by the Board. The court granted a temporary injunction. The High Court vacated the temporary injunction order.
10. The Board thereafter filed a comprehensive Civil Suit for declaration, Specific Performance of the Contract and Permanent Injunction.
11. The learned trial court referred the disputes to the sole arbitrator Shri Justice K.K. Dubey (Retired) for determination of disputes.
12. Being aggrieved by the award passed by the arbitrator, the Board initiated appropriate proceedings for setting aside the award passed by the arbitrator.
13. The trial court confirmed the award passed by the arbitrator against which the Board preferred appeals. The High Court dismissed the appeals preferred by the Board.
Finding of the Court :
Finding of the arbitrator cannot be said to be perverse to give rise to legal misconduct deserving intervention.
Result : Appeal dismissed.
JUDGMENT
B. Sudershan Reddy, J.—
On February 18, 1975 the M.P. Housing Board (for short ‘the Board’) and Progressive Writers and Publishers, New Delhi (hereinafter called as the ‘depositor’) entered into an agreement whereunder the Board agreed to construct a building called the ‘Hitavada Press Complex’ on the land admeasuring 33932 sq. ft. situated at T.T.Nagar, Bhopal. The terms of agreement, inter-alia, provided that the Board would execute the construction of Hitavada Press Complex and charge 5% supervision charges of the actual expenditure on the project. The cost of construction was to be borne by the depositor. The depositor was required to place funds including supervision charges at the disposal of the Board in advance as agreed upon. The work was expected to be completed within 18-24 months. The possession of the land was handed over to the Board for the purposes of construction of building. In case of overrun of expenditure and funds, the revised estimates were to be submitted and the administrative approval of the depositor was required to be obtained. In the event of any dispute, the matter was required to be referred to the Secretary, Government of Madhya Pradesh for decision.
2. The cost of construction of the building was estimated at Rs. 28 lakhs out of which the depositor was required to deposit an amount of Rs. 14 lakhs at the outset and the balance thereafter. The initial amount of Rs.14 lakhs was accordingly deposited by the depositor with the Board. However, the depositor failed to deposit the balance amount. In the meanwhile, the Board had paid the amounts from its own funds in order to complete the construction of the building. The depositor expressed its desire to retain only that portion of the building where the printing press was located including mezzanine floor along with two adjacent halls on the first floor and accordingly made a representation to the Board. The Board in its turn agreed to the suggestion and thereafter parties entered into the second building agreement dated May 4, 1977; under which it was expressly agreed between the parties that the depositor would transfer the total area of the land and building which was 33932 sq. ft. and the Board would in turn re-transfer 7437 sq.ft. of land along with hall having Press portion constructed thereon for which the depositor would pay Rs. 3.50 lakhs to the Board in 15 equal yearly installments. The Board agreed to grant a loan of Rs. 3.50 lakhs repayable with interest against an equitable mortgage of the Press building and the portion of the land thereon. Out of the said amount, Rs. 50,000/- was to be paid by the Board to Punjab and Sind Bank as per the instructions of the depositor. It was also agreed between the parties that the Board in order to acquire full ownership of the entire complex shall return the amount of Rs. 14 lakhs and for that purpose the original documents pledged by the depositor with the Punjab and Sind Bank were to be redeemed by the Board upon payment of Rs.13.50 lakhs to the Bank. Upon fulfillment of the said conditions, the Board was entitled to complete the construction of the building in its possession and enjoy the same as the full owner.
3. The Board in terms of the second building agreement had paid the agreed sum to the Bank and obtained the original title deeds of the part of the plot admeasuring 19319 sq. ft only. However, the title deeds of the residual area were not handed over to the Board. The construction was completed by the Board.
4. For whatever be the reasons, the parties have entered into third building agreement on May 31, 1980. The recitals in the agreement disclose that certain complications and disputes arose between the parties after execution of the earlier two agreements resulting in litigation between the parties which were pending as on the date of third building agreement. In the third building agreement it is inter-alia stated that “on the request of the depositor vide their letter of May
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