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SUPREME COURT OF INDIA
R. BANUMATHI, A.S. BOPANNA, HRISHIKESH ROY, JJ.
Jagjeet Singh Lyallpuri (dead) Through Lrs. & Ors. – Appellants
Versus
M/s Unitop Apartments & Builders Ltd. – Respondents
Civil Appeal No.692 of 2016
Decided on : 03-12-2019
(A) Arbitration and Conciliation Act, 1996 – Sections 34 and 37 read with Section 19 – Appeal against arbitral award – Remand of matter to sole Arbitrator – Rules of procedure to be followed by Arbitral Tribunal is flexible and can be agreed upon by parties – In order to consider whether challenge is sustainable on the ground available in law, at the outset it is necessary to examine whether procedural lapse if any is committed by Arbitrator in unilaterally denying the opportunity to parties so as to make the award invalid and to set aside the same exercising power under Section 34 or in an appeal under Section 37 of Act, 1996. (B) Arbitration and Conciliation Act, 1996 – Sections 34 and 37 – Appeal against arbitral award – Arbitrator has adverted to all aspects in a sequential manner and has recorded his conclusion in answer to contentions that were put forth – After having arrived at the conclusion that respondent has committed breach, Arbitrator has also adverted to said contention relating to cost incurred for the extent of construction made, as claimed and has rejected the same – When respondent who were themselves claimants before Arbitrator have not conducted the matter in an appropriate manner by securing affidavit evidence of erstwhile directors /shareholders, they cannot at this stage turn around and contend that Arbitrator has misconducted himself – Challenge to award does not fall under any of clauses of Section 34 of Act, 1996 – In view of breach and respondent herein failing in present lis there would be no absolute right in their favour since inevitable loss suffered by appellants by not being able to enjoy property for last more than two decades also cannot be lost sight – Appellant herein who is owner of property will have to enter into a fresh contract and need and manner of development may not be the same at this point – In exercise of our power under Article 142 of Constitution of India appellant is directed to pay sum of Rs. 45,00,000/- to respondent whereupon they would be entitled to assume possession of subject land and proceed to enjoy the same in accordance with law. (Paras 15, 16, 17 and 18)
Facts of the case:
Appellants are before this Court assailing order dated 31.07.2015 passed by High Court of Punjab and Haryana at Chandigarh in FAO No. 5704 of 2012 (O&M). Through the said order, High Court has remanded the matter to sole Arbitrator for providing opportunity of leading evidence to both the parties and also grant opportunity to cross-examine witnesses and thereafter decide each and every claim and counter claim separately on merits.
Findings of Court:
In view of the breach and the respondent herein failing in the present lis there would be no absolute right in their favour since the inevitable loss suffered by appellants by not being able to enjoy the property for the last more than two decades also cannot be lost sight. The appellant herein who is the owner of the property will have to enter into a fresh contract and the need and manner of development may not be the same at this point and in such event the appellant herein also would be put to some loss to undertake the demolition process themselves or there would be reduction that would be made by the alternate developers who would undertake the project.
Result : Appeal disposed of.
JUDGMENT :
A.S. Bopanna, J.
1. The appellants are before this Court assailing the order dated 31.07.2015 passed by the High Court of Punjab and Haryana at Chandigarh in FAO No. 5704 of 2012 (O&M). Through the said order, the High Court has remanded the matter to the sole Arbitrator Mr. Justice Kuldip Singh, retired Judge, Supreme Court of India for providing opportunity of leading evidence to both the parties and also grant opportunity to cross-examine the witnesses and thereafter decide each and every claim and counter claim separately on merits. The said order is passed in an appeal filed by the respondent herein under Section 37 of the Arbitration and Conciliation Act, 1996 (‘Act 1996’ for short). The appellant herein who was the respondent in the said appeal is therefore before this Court claiming to be aggrieved by the said order.
2. The brief facts leading to the present situation is that the appellants herein are joint owners of the land measuring 14 Kanals and 3 Marlas (8560 Sq. yards) situate at village Sunet, Tehsil and District Ludhiana, State of Punjab. The respondent company through its representatives claiming to be well-versed with construction and development of properties approached the appellants for joint venture in constructing a residential-cum-commercial complex on the subject land. Accordingly, an agreement dated 14.12.1996 was entered into and among other terms agreed therein, the respondent had undertaken to complete the construction of the building consisting of at least six floors within three years from the date of obtaining the sanctioned plan from the Ludhiana Municipal Corporation. The project was required to be funded by the respondent and a sum of Rs. 45,00,000/(Rupees Forty Five Lakhs only) was to be deposited with the appellant as a guarantee for completion of the project. In that view, the appellants were expected to retain the same if the building is not completed within the period of three years. The sale proceeds from the constructed building was to be shared in the ratio of 48:52 % between the appellants and the respondent.
3. Pursuant to such agreement the respondent secured the sanction of the building plan from the Municipal Corporation on 04.07.1997. The period of three years was to be computed from that point as per the agreement. Hence the construction ought to have been completed by 03.07.2000. According to the appellant, the respondent though commenced the construction during August, 1997, the activity was undertaken until 31.03.1999 and the project was abandoned by them thereafter. Since the construction was not completed by 03.07.2000 and no further progress was made despite the appellant having waited beyond the said period, the appellants got issued a legal notice dated 01.11.2001 and terminated the agreement dated 14.12.1996. The respondent though issued reply dated 28.11.2001 did not proceed further to make progress in the construction.
4. The appellants further claim that in such circumstance the appellant and the respondent entered into a compromise and a cancellation agreement dated 26.10.2004 was executed due to which an amount of Rs. 40,00,000/(Rupees Forty Lakhs only) from the amount which was received as security deposit was returned. Notwithstanding the same, since there was change of guard in the composition of the management, the respondent filed an application under Section 9 of the Act, 1996 seeking to restrain the appellants from damaging or demolishing the construction which had been raised by the respondents. Immediately thereafter a notice dated 23.11.2004 was issued by the respondent invoking the arbitration clause for referring the matter to arbitration. The Arbitration Case No. 124 of 2006 under Section 11 of the Act, 1996 filed by the respondent was allowed on 03.07.2009 and Mr. Justice Kuldip Singh, retired Judge, Supreme Court of India was appointed as the sole arbitrator to resolve the dispute between the parties.
5. In that view the parties appeared before
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