The main legal point established in the judgment is the importance of bringing legal heirs on record in cases involving the death of partners during Arbitration proceedings, and the inability to modify an award to exclude the liability of deceased partners without causing injustice to the remaining partners and the firm.

1. The Petitioner-Contractor/Developer, has challenged award dated 15 May 2012 passed by the Arbitral Tribunal as appointed by the consent, based upon the agreements between the parties. Two learned Arbitrator's majority award, is under challenge. Other Arbitrator expressed dissenting view, stated to be, in support of the Petitioner (Original-Respondent), against the Respondent (Original-Claimant).

2. The operative part of the majority award is as under:

“a. Respondents do pay to the Claimants Rs.7,35,000/- towards last installment and Rs.10,80,000/- for excess FSI with 18% interest thereon from 1/10/2007 till actual payment.

b. Respondents shall further pay to the Claimants Rs.25,00,572/- towards interest as per chart annexed.

c. Respondents shall further pay to the Claimants Rs.9,73,753/- towards construction of community hall.

d. Respondents shall further pay to the Claimants Rs.7,00,000/- towards costs.

(Respondents No. 1 to 7 are liable to make above payments jointly and severally)

e. Respondents shall bear their own costs.

f. Counter claim of the Respondents is hereby rejected.

g. Respondents' request in letter dated 10/08/2001 for one more sitting of the Tribunal has to be rejected.”

3. The basic facts are as under:

The Respondent Society is the owner of 4 constructed buildings and the plot. Even after the construction of 4 buildings, there remained balance FSI admeasuring 13400 sq. ft. on the property. On 12 October 1995, the Petitioner (The Developer) submitted its offer accepting all the terms and conditions laid down in the Notice inviting offer. The Petitioner offered to pay the Society at the rate of Rs.11,025/- per sq. ft. for available built up area.

4. On 9 April 1996, an agreement was executed between the Society and the Petitioner whereby, it was agreed that the Society would assign the Development rights with respect to the utilization of balance FSI admeasuring 13000 sq. ft. in favour of the Petitioner for construction of the balance FSI. On 2 July 1996, the income tax clearance was made. On 22 June 1998, the commencement certificate was issued. On 3 June 2001, a supplementary agreement was executed between the Society and the Petitioner recording the terms and conditions, by which earlier obligations, were stated to be waived and discharged including the Claims. The Respondent was to execute a Power of Attorney in favour of the Petitioner as per the terms of the agreement, but the same was never executed. As per the supplementary agreement the Petitioner was to utilize 6300 sq. ft. of TDR for further construction.

5. On 16 August 2001, the construction of Awing consisting of stilt + 6 upper floors was completed and an Occupation Certificate was obtained from the Brihan Mumbai Municipal Corporation (for short, “the BMC”). Till the receipt of Occupation Certificate, the Petitioner had made payment of Rs.1,43,40,000/- On 25 March 2002, a certificate was issued by an Architect stating that the FSI of 13650 sq. ft. was consumed by the Petitioner which was 250 sq. ft. in excess of the agreed FSI of 13400 sq.ft. On 29 March 2002, the Respondent demanded unpaid balance of Rs.7,35,000/- and charges for use of FSI to the extent of Rs.2,81,250/-.

6. On 5 April 2002, the Respondent requested the Petitioner to proceed with the construction of the Community Hall and also to pay the balance amount of Rs.7,35,000/- along with Rs.2,81,250/- being the price for an additional FSI consumed by the Petitioner. Since, the Petitioner was informed not to proceed with the work of construction of B-Wing unless plans for community hall were sanctioned, the Petitioner filed Small Cause Suit No. 3909 of 2002 to restrain the Respondent from obstructing the Petitioner's construction. On 29 April 2002, the Petitioner sent a letter that the Plans of Community Hall could not be submitted as no Layout Plan had been annexed to the agreement as the Respondent had not executed Irrevocable Power of Attorney. The security deposit was towards the la