The court upheld the arbitration award, confirming the appellant's breach of contract and the limited scope of judicial review under the Arbitration and Conciliation Act.

JUDGMENT :

V. KAMESWAR RAO, J.

The challenge in this appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short ‘Act of 1996’) is to an order dated 31.08.2015 passed by the Court of Principal District and Sessions Judge, Mysuru, whereby the petition filed under Section 34 Act of 1996 challenging the award dated 22.04.2013, has been rejected.

2. Some of the facts which are required to be noted are that, the respondent, who was the claimant before the learned Arbitrator and the respondent before the Sessions Judge, had entered into an agreement of sale with the appellant in respect of a residential flat bearing No.G-1 on the ground floor having built up area under 1700 sq. ft. along with undivided interest of 656 sq. ft. in the whole property for a consideration of 29,00,000/- (Rupees Twenty Nine Lakhs only). The case of the respondent before the learned Arbitrator was that the appellant had unilaterally changed the flat from G-1 to G-3. The appellant had also failed to furnish the necessary Khatha certificate; the approved building plan to enable the respondent avail the finance of Rs.30.97,900/- from the ICICI Bank.

3. Despite that, the respondent had paid an amount of Rs.10,00,000/- (Rupees Ten Lakhs only) to the appellant on 13.10.2007. In addition to that an amount of Rs.3,10,000/- (Rupees Three Lakhs Ten Thousand only), was paid as advance.

4. The case of the appellant was that, the respondent had failed to pay the amount in installments as agreed; therefore, the allotment had to be cancelled. It was also his case that, still to maintain cordiality, he allotted flat No.S-1, II Floor in Pratham Jayalakshmi annexe Project.

5. In the above background, disputes having arisen, the same were referred for adjudication by the sole Arbitrator. The reliefs claimed by the respondent before the Arbitrator were the following:

“1. Specific Performance of Agreement dated 29.03.2007.

2. Directions to the respondent to deliver the vacant possession of flat, which is the subject matter of Agreement dated29.03.2007.

3. Alternative relief of refund of advance Sale consideration of Rs.13,10,000/- with interest @ 18% from the date of respective payment till the repayment of the same.

4. Costs of the proceedings.”

6. The Arbitrator in terms of the impugned award upheld the contentions of the respondent by holding that the appellant is guilty of breach of agreement. The Arbitrator passed an award granting alternative relief of refund of Rs.13,10,000/- (Rupees Thirteen Lakhs Ten Thousand only)with interest at 18% p.a., and cost of the proceedings.

7. The award was challenged by the appellant under Section 34 of the Act of 1996 before the Sessions Judge by primarily stating in paragraph No.4 of the petition as under:

“1. The Arbitrator committed error in holding that the respondent has violated the terms of the Agreement dated 29.03.2007 and the said finding is contrary to the evidence on record.

2. The Arbitrator has exceeded the powers vested in awarding the interest @ 18% p.a. though such term is not in the Agreement.

3. The Award is opposed to public policy.

4. Since the Award is without proper appreciation of the evidence, violative of principles of natural justice.”

8. The learned Sessions Judge framed the following points for the determination : 

“1. Whether the impugned Award calls for interference under Section 34 of the Arbitration and Conciliation of Act, 1996?

2. If so, what order?”

9. Suffice to state that, point No.1 was held in negative. The reasoning given by the learned Sessions Judge can be seen from Paragraphs Nos.10 and 11 of the impugned order.

10. It may also be stated that, the learned Sessions Judge has by noting the scope of Section 34 of the Act of 1996 held that, the award passed by the learned Arbitrator cannot be interfered with.

11. In paragraph No.11 of the award, the Sessions Judge by agreeing with the findings recorded by the learned Arbitrator, in as much as that, the respondent made all efforts to perform and mate