An arbitral award that contravenes the terms of the underlying agreement is patently illegal and can be set aside by the court, regardless of prior pleadings on jurisdiction.

JUDGMENT :

1. By Arbitration Appeal (St.) No.93127 of 2020, the Appellants have challenged the impugned judgment and order dated 25th January, 2020 passed by the learned District Judge, Thane in Civil Miscellaneous Application (Arbitration) No.35 of 2012 (for short CMA No.35 of 2012), whereas in the Arbitration Appeal (St.) No.5662 of 2020, there is challenge to the impugned judgment and order dated 25th January, 2020 in so far as it dismisses Civil Miscellaneous Application (Arbitration) No.76 of 2013 (for short CMA No.76 of 2013) against the same arbitral Award passed by the Majority Arbitral Tribunal dated 10th December, 2011. Both the CMA No.35 of 2012 and CMA No.76 of 2013 were clubbed together and decided by the impugned judgment and order dated 25th January, 2020.

2. Both the Appellants have sought the setting aside of the impugned judgment and Order in so far as it dismisses the respective CMA No.35 of 2012 and CMA No.76 of 2013.

3. In order to consider the Arbitration Appeals, filed under Section 37 of the ARBITRATION ACT , it would be necessary to set out a brief background of facts in both the Arbitration Appeals. For the sake of convenience the Appellants and Respondents in Arbitration Appeal (St.) No.93127 of 2020 are referred to.

4. The Appellants in Arbitration Appeal (St.) No.93127 of 2020 – Upendra Kantilal Thanawala together with his brothers Pankaj and Vyomesh equally own 1/3rd share of their late father Kantilal’s share in the larger property. Thus, Upendra, Pankaj and Vyomesh are entitled to 1/9th share in the larger property.

5. By an Agreement for Development dated 11th February, 2003, Vyomesh granted development rights in respect of his 1/9th share in the larger property in favour of Respondent No.1 including his share in the Bungalow for and at consideration reserved thereunder. It is necessary to note that under the Agreement for Development, the larger property excluded the Bungalow under the definition of the “said land” in recital I of the Agreement. This larger property with the bungalow has been defined in Clause 12 of the Agreement as “the said property”. Under Clause 22 of the said Agreement, Vyomesh has given possession of his 1/9th share in the said land and not of the said property. Thus, it is contended by the Appellants that Vyomesh’s share in the Bungalow was never handed over to the Respondent. Reliance has been placed by the Appellants on the cross examination of Vyomesh in the arbitral proceedings wherein Vyomesh has admitted that no part of the Bungalow was given to the Respondent (Vyomesh’s Cross examination is at page 870 of Volume 3). Vyomesh was the Respondents’ witness in the arbitral proceedings.

6. The subject agreement was executed between the Appellants and Respondents on 6th August, 2003 in respect of the subject property agreed to be developed for at the consideration of Rs.2,28,75,000/-. This consideration was arrived at calculating the net FSI quotient at 25,000 Square Feet @ 915/- per square feet. A sum of Rs.55,00,000/- was paid to the Appellants at the time of the execution of the subject Agreement. It is noted that the subject Agreement is stamped at 1% of the total consideration. The contention of the Appellants in the arbitral proceedings was that the subject agreement is a Development Agreement and not an Agreement to Sell. They have relied upon the stamp duty paid on Agreement to Sell at the contemporaneous period which had quotient at 5% of the value of the Agreement and the Development Agreement’s quotient was at 1% of the value of the Agreemen