S. Ravindra Bhat J.

1. These appeals under Section 37 of the Arbitration and Conciliation Act, 1996, (hereafter “the Act”) are preferred against the judgment and order of the learned Single Judge dated 26.11.2008, in O.M.P. No. 26/2003. The impugned judgment set aside the order of the learned Sole Arbitrator who constituted the arbitral tribunal (hereafter “the Tribunal”), under Section 34 of the Act. The Tribunal had upheld claims by Puri Constructions Ltd and its sister concerns (collectively referred to as “PCL”) against Larsen and Toubro Ltd (“L&T”) and awarded, upon a finding of economic coercion of PCL, damages to the tune of Rs. 35 crores against L&T on account of breach of contract. L&T was directed to settle the claims of Lord Krishna Bank (“LKB”) within four weeks - by repayment of loan of Rs. 6 crores with such interest that may be due and payable. A further direction to L&T was issued to secure the release of title deeds of 15 acres of land from the bank and to reimburse PCL’s interest charges and in default pay a sum of Rs. 75 crores for loss of saleable area in respect of the said 15 acres of land mortgaged with the LKB, within 4 weeks. Other consequential directions were issued in the award.

Facts of the case

2. PCL and its sister companies were in possession of vast stretches of land in Gurgaon District, Haryana. PCL secured licenses from the Director, Town and City Planning, Haryana (hereafter “Town Planner”) to develop these lands for residential group housing scheme purposes. Initially, PCL had entered into an agreement with ITCREF (another company) and formed a joint venture known as 'Florentine India Ltd' to develop these lands for residential group housing project purposes. In terms of this joint venture, ITCREF funded PCL for purchasing other lands and acquiring licenses etc. Later, however, ITCREF decided to exit from property development business. For this purpose, it negotiated with PCL and introduced L&T into the project. ITCREF had unsettled claims against PCL. To secure its claim ITCREF mandated that its interests in the project should be mentioned in the agreement between PCL and L&T.

3. L&T (appellant in FAO(OS) 194/2009) and PCL (appellant in FAO (OS) Nos. 21-23/2009) entered into an agreement for land development (hereafter “the Development Agreement”) on 10-03-1998 (signed on 19-01-1998). After the Development Agreement, a Supplementary Agreement was entered into between the two on 30-12-1999 (called “Supplementary Agreement”). Pursuant to the Supplementary Agreement, a Tripartite Agreement was entered into between PCL, L&T and Lord Krishna Bank (LKB) on 10-01-2000 (hereafter “Tripartite Agreement”).

Terms of the Development Agreement

4. According to the Development Agreement, the total land to be developed was 40.661 acres (Schedule “A”); however, in the beginning, L&T was to complete construction (within 60 months) in Schedule “B” of the property, which covered 18.025 acres [“Phase 1”]. After the completion of the first phase, L&T, in consultation with PCL, could review and revise the specifications, schedule and the mandate, according to market conditions. The Development Agreement stipulated that development of and construction upon the entire lands was L&T’s responsibility, at its costs and expenses. It was entitled- as consideration, to 75% of the built up area together with proportionate interest in the land. PCL and others were entitled to the balance 25% of the area (Clause 7). The agreement, also, specifically recognized PCL’s other commitment- in the form of an agreement with ITCREF (dated 30-07-1997) in terms of which PCL was to hand over 1,95,000 sq ft of built up area to ITCREF within 5 years. The option to choose the built up area was with ITCREF. After mentioning this commitment, the Development Agreement provided that the understanding of PCL with ITCREF stood further modified. PCL committed that an area of Rs. 2,20,416 sq. ft. was allocable to ITCREF to satisfy the latte