The cancellation of the power of attorney did not constitute a force majeure event, and the appellant could not shirk its responsibility under the doctrine of frustration of contract.

S. RAVINDRA BHAT

1. The Appellant impugns a judgment and order of a learned Single Judge dated 11-12-2014 in OMP 13/2012, a Petition under Section 34 of the Arbitration and Conciliation Act, 1996 ("the Act").

2. Ludhiana Improvement Trust ("the Trust") is a body corporate established under the Punjab Town Improvement Act, 1922 for the planned development of the city of Ludhiana. The Trust invited bids for construction of a City Centre in Ludhiana ("the City Centre project"). Upon evaluation of the bids, the appellant was declared successful. Consequently, a concession agreement was executed between Today Homes and LIT. Pursuant to the concession agreement, nearly 25.59 acres was handed over to Today Homes. A tripartite agreement was also executed between Today Homes, LIT and the HDFC Bank ("the Bank"), in terms of which the sale proceeds received on booking of saleable areas were required to be deposited in a escrow account, titled as : "Today Homes Infrastructure Pvt. Ltd. - City Centre." The Trust, to enable the appellant to discharge its obligations, executed a power of attorney dated 29-08-2005 in its favour. As a consequence, the appellant, which had to develop, construct, market and sell the units / flats on the land concerened, inter alia, entered into an agreement with the respondent ("the claimant"). The claimant entered into an agreement to purchase property, dated 09.03.2006 (hereinafter referred to as "agreement to sell") with the Appellant. The latter did so, both for itself as well as the attorney of LIT.

3. Disputes arose between the appellant and LIT, which led to the cancellation of the power of attorney dated 29.08.2005. This cancellation was effected on 05.10.2006 and the event was not conveyed to the claimant. The appellant, at some time, sought appointment of an arbitrator in terms of the condition in the contract with LIT and approached the Punjab and Haryana High Court. Based on the petition, an arbitrator was appointed. LIT felt aggrieved and went in appeal to the Supreme Court which set aside the order of the Punjab and Haryana High Court by judgment dated 14.10.2008. The matter was remitted for fresh consideration. The Supreme Court accepted LIT's plea that the High Court had not dealt with its argument that its agreement with the appellant was void, having been entered into in suspicious circumstances, and therefore, by logical corollary the arbitration agreement could not survive, independently, of the main agreement. Upon reconsideration, after remand, the High Court held that the Agreement dated 24.05.2005 (between LIT and the appellant) was neither legal nor valid and that their inter se disputes were not arbitrable. This order was appealed against. The Supreme Court, in this round, accepted the appellant's plea and set aside the order of the Single Judge of the Punjab and Haryana High Court, with a direction that the matter be considered de novo. It was held that the Single Judge exceeded his jurisdiction, in examining the legal validity of the main agreement.

4. In the meanwhile, before the Supreme Court made its order, the claimant's application for appointment of arbitrator had been accepted and disposed of on 26-04-2010, appointing an arbitrator in Arb. Petn No. 273/2009. At this point of time the Single Judge of the Punjab and Haryana High Court's judgment was operational. During the arbitration proceedings, the appellant’s move to have the LIT impleaded as a party was unsuccessful; the arbitrator rejected this application on 21.04.2011. The proceeding sheet of this date shows that parties had carried out admission and denial of documents by employing the methodology of affidavits. The single issue framed by the arbitrator on 10.05.2011 was to the following effect:-

"Whether the claims of the claimant are tenable against the respondent? If so, to what extent?"

The same day, parties agreed that it was not necessary to lead oral evidence or, to file affidavit(s) of evidence since, the matte