The court upheld the arbitral award, affirming that specific performance can be granted based on a composite understanding derived from multiple correspondence and agreements, emphasizing the need for consistency in contractual interpretation.

JUDGMENT :

SOMASEKHAR SUNDARESAN, J.

Context and Factual Background:

1. This Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Arbitration Act”) challenging an Arbitral Award dated August 5, 2017, granting specific performance of a Development Agreement discerned from a letter dated November 4, 2003 read with an unexecuted execution draft of a Development Agreement stamped in December 2004, further supplemented by Minutes of Meeting dated December 20, 2005 (collectively “Enforced Agreement”).

2. The contention of the Petitioner is that the Enforced Agreement could have never been the subject matter of specific performance inasmuch as what was referred to arbitration comprised a combination of instruments different from the combination of instruments that constitutes the Enforced Agreement.

3. Before dealing into the merits of the challenge, a brief factual over view would be appropriate :

(a) The Petitioner, Bombay Textile Research Association (“BTRA”) is a private non-profit organization set up in connection with the textile trade and industry. BTRA owns property admeasuring approximately 57,195 square meters of land located in Ghatkopar (West), Mumbai, which is more particularly described in the Impugned Award (“Subject Property”);

(b) By letter dated September 22, 2003 (“September 2003 Letter”), the Respondent, Nilkanth Enterprise (“Nilkanth”) expressed its interest to purchase and develop the Subject Property. Nilkanth offered a price of Rs.53.50 Crores for the property admeasuring about 57,195 square meters, excluding one unoccupied building of 16 flats comprising of a ground floor and four storeys. Nilkanth identified the approximate development potential with a Floor Space Index (“FSI”) area of 15,000 square feet;

(c) This letter offered a payment by Nilkanth of Rs.1 Crore on confirmation of the offer which would be kept deposited with BTRA. Further payment of Rs.2 Crores was to be made on execution of a Memorandum of Understanding (“MOU”) which was meant to be effected within a period of thirty days from such confirmation. On receipt of permission from the Urban Land Ceiling (“ULC”) authorities, a further amount of Rs. 2 Crores towards part payment was offered. Thereafter, the balance sum of Rs.48.5 Crores was offered to be paid in five equal installments of Rs.9.7 Crores each, every six months after receipt of the ULC permission;

(d) By letter dated October 21, 2003 (“October 2003 Letter”) BTRA replied to the said letter and made a counter offer to Nilkanth. BTRA listed out the terms on which it would accept Nilkanth’s offer. BTRA stated that the letter of intent from the “Development Dept.” of the Municipal Corporation of Greater Mumbai (“MCGM”) for carving out the plot either for residential or commercial users would be necessary since the entire land had been reserved for activity of textile research. BTRA indicated that the sale would be for land admeasuring approximately 56,000 square meters, in terms of the area shown by one Mr. Parimal Parekh, an architect, in a plan (“Parekh Plan”) after excluding one unoccupied building of 16 flats referred to in the September 2003 letter;

(e) The October 2003 letter also confirmed the price of Rs.53.50 Crores but stated that Rs.1.5 Crores should be paid on confirmation of the offer, after which, upon execution of an MOU within thirty days, a further sum of Rs.4 Crores would be payable to BTRA. After obtaining ULC permission, a further sum of Rs.4 Crores would be payable and the balance sum of Rs.44 Crores would be paid in eight quarter