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IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT NAGPUR
Rohit B Deo, J.
Ispat Industries Ltd - Appellant
Versus
Maharashtra Airport Development Company Limited - Respondent
Arbitration Appeal No. 21 of 2017
Decided On : 28-01-2021
The appellant, a claimant, challenged the judgment and order of the learned Principal District Judge, Nagpur (PDJ) in Miscellaneous Civil Application 834/2009 whereby the application preferred by the claimant under Section 34 of the Arbitration and Conciliation Act (the Act) was rejected and the award dated 27-10-2009 made by the learned Arbitrator was upheld. The dispute arose out of a contract for the allotment of land in the Multi-Model International Hub at Nagpur (MIHAN). The claimant submitted that the learned Arbitrator committed a patent illegality in ignoring the substantive law of the land, and the learned PDJ erred in not interfering with the award. The Court held that the learned PDJ failed to independently consider the issues involved and merely referred to the findings recorded by the learned Arbitrator without providing any reasons for the conclusions reached. The Court also noted that the learned Arbitrator ignored the provisions of sections 7 and 51 of the Indian Contract Act, 1872 (Contract Act) and the doctrine of 'unjust enrichment'. The Court remitted the matter to the learned PDJ for fresh decision after hearing the parties.
Fact of the Case:
The appellant, a claimant, challenged the judgment and order of the learned Principal District Judge, Nagpur (PDJ) in Miscellaneous Civil Application 834/2009 whereby the application preferred by the claimant under Section 34 of the Arbitration and Conciliation Act (the Act) was rejected and the award dated 27-10-2009 made by the learned Arbitrator was upheld. The dispute arose out of a contract for the allotment of land in the Multi-Model International Hub at Nagpur (MIHAN).
Finding of the Court:
The Court held that the learned PDJ failed to independently consider the issues involved and merely referred to the findings recorded by the learned Arbitrator without providing any reasons for the conclusions reached. The Court also noted that the learned Arbitrator ignored the provisions of sections 7 and 51 of the Indian Contract Act, 1872 (Contract Act) and the doctrine of 'unjust enrichment'.
Issues: Whether the learned PDJ erred in not interfering with the award made by the learned Arbitrator.
Ratio Decidendi: The Court held that the learned PDJ failed to independently consider the issues involved and merely referred to the findings recorded by the learned Arbitrator without providing any reasons for the conclusions reached. The Court also noted that the learned Arbitrator ignored the provisions of sections 7 and 51 of the Indian Contract Act, 1872 (Contract Act) and the doctrine of 'unjust enrichment'.
Final Decision: The Court remitted the matter to the learned PDJ for fresh decision after hearing the parties.
JUDGMENT
Rohit B. Deo, J. - The appellant is the original claimant (hereinafter referred to as the 'claimant') and is aggrieved by the judgment and order dated 09-12-2016 rendered by the learned Principal District Judge, Nagpur (PDJ) in Miscellaneous Civil Application 834/2009 whereby the application preferred by the claimant under Section 34 of the Arbitration and Conciliation Act (the Act) is rejected and the award dated 27-10-2009 made by the learned Arbitrator is upheld.
2. The claimant is engaged in manufacture of steel products.
3. The respondent-Maharashtra Airport Development Company Limited (hereinafter referred to as the MADC) is a Government company incorporated under the Companies Act, 1956 and tasked with the development of Airports. MADC is the Nodal Agency for development of the Multi-Model International Hub at Nagpur (MIHAN).
4. Substantial land was acquired in the vicinity of the Nagpur Airport and a Special Economic Zone (SEZ), is carved out, with the purpose of allotment of plots to industries who would avail certain tax and other fiscal benefits.
5. The factual backdrop of the dispute which is culled out by the learned Arbitrator may now be noted.
6. The claimant addressed letter dated 20-12-2006 requesting MADC to allot 2 hectares of land in the SEZ and to quote a competitive price. The said letter conveyed that the claimant's technical team would coordinate with the MADC and select the site.
7. Madc responded by letter dated 24-1-2007 and conveyed to the claimant its decision to allot 5 acres of land @ Rs. 40,00,000/- (Rupees Forty Lakhs) per acre. The recitals in the letter dated 24-1-2007 which are reproduced by the learned Arbitrator read thus :
"You are requested to send us 20% of the total consideration as advance within seven days from the receipt of this letter. The balance 80% of the amount is to be paid at the time of taking possession of the land which shall be done within sixty days. However if you so desire, we can accept a Bank Guarantee for the remaining 80% of the amount and give you benefit for 80% of the amount on quarterly installments with effect from the date of firm letter of allotment.
Please note that possession of the land has to be taken within sixty days and the building design has to be submitted to MADC Ltd., the Special Project Authority, for approval, which shall be given within thirty days thereafter. The date of approval shall be treated as the zero date and within six months from the date you have to use your entire FSI of 1.5. At the end of this any remaining FSI shall extinguish itself.
The area of about 5 Acres of land is subject to actual measurement on the ground, which shall be jointly done by your officers along with the officers of MADC Ltd.
The allotment is subject to approval of the Board of Directors, which shall be obtained after 20% of advance payment."
8. The claimant then addressed letter dated 07-2-2007 expressing gratitude and conveying to MADC that the claimant is making arrangements to pay the advance amount of 20% within a week's time.
9. Madc responded by letter dated 08-2-2007 asking the claimant to ensure that the advance payment of Rs.40,00,000/- (Rupees Forty Lakhs) be paid on or before 14-2-2007, failing which the consideration shall stand revised to Rs.51,00,000/- (Rupees Fifty One Lakhs) per acre.
10. The claimant deposited the amount of Rs.40,00,000/- (Rupees Forty Lakhs) on 13-2-2007 and requested MADC to forward the draft format of the bank guarantee since the claimant intended to pay the balance consideration in quarterly installments of Rs.40,00,000/- (Rupees Forty Lakhs) due and payable from the date of receipt of possession.
11. The Board of Directors of MADC, in its meeting held on 30-3-2007, resolved to approve the proposal for allotment of 5 acres of land @ Rs.40,00,000/- (Rupees Forty Lakhs) per acre to the claimant.
12. Madc addressed letter dated 12-4-2007 acknowledging the receipt of the advance amount and put the claimant on notice that the bala
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