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2018 Supreme(Del) 415
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J.
SUNIL KUKREJA - Petitioner
Versus
NORTH WEST SALES AND MARKETING LTD. - Respondent
O.M.P. (COMM) 456 of 2017, O.M.P. (COMM) 56 of 2018
Decided on : 24-04-2018
Advocate Appeared:
For the Appellant : Mr.Anil Kher, Sr. Adv. with Mr.D.R. Bhatia, Mr.Kunal Kher and Ms.Subiya Akbar Warsi, Advs.
For the Respondent: Mr.Ramesh Singh, Ms.Manisha Handa and Mr.Chirayu Jain, Advs.
The court emphasized the importance of considering all relevant evidence and making decisions based on a proper basis, highlighting the requirement for arbitrators to act within their mandate and not ignore material evidence.
Headnote:
Arbitration - Memorandum of Understanding - Arbitration and Conciliation Act, 1996 - Section 34
Fact of the Case:
Dispute arose over a Memorandum of Understanding (MOU) for the purchase of space in a building. The petitioner claimed non-construction of the building and sought refund and interest. The respondent disputed the claims, leading to arbitration.
Finding of the Court:
The court found that the Arbitrator failed to consider crucial evidence and made decisions without proper basis, leading to a perverse award. The court set aside the Arbitral Award and ordered the parties to initiate fresh arbitration.
Issues: Discrepancy in payment, existence of discount, non-construction of the building, payment of interest, and lack of consideration of evidence by the Arbitrator.
Ratio Decidendi: The Arbitrator's failure to consider crucial evidence and make decisions without proper basis led to a perverse award, justifying setting it aside.
Final Decision: The Impugned Award was set aside, and the parties were directed to initiate fresh arbitration. The respondent was ordered to pay a cost of Rs.50,000 to the petitioner for the proceedings.
NAVIN CHAWLA, J.
1. These petitions have been filed under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Award dated 22.08.2017 passed by the Sole Arbitrator. Sunil Kukreja shall be referred to as the petitioner and North West Sales and Marketing Ltd. shall be referred to as the respondent in the order.
2. The disputes between the parties arose in relation to the Memorandum of Understanding (MOU) dated 12.11.2009. Under the said MOU, the petitioner (Sunil Kukreja) agreed to purchase a space with super area of approximately 10,000 square feet and covered area of 5,000 square feet on the 5th floor of the building being constructed by the respondent (North West Sales And Marketing Ltd.) at plot bearing No.40, Community Centre, Block-A, Paschim Puri, Delhi-110063. The MOU records that the sale consideration for the said allotment is Rs.5 crores. The MOU further records that the respondent has received the entire sum of Rs.5 crores from the petitioner as total sale consideration.
3. It is the case of the petitioner that as the respondent failed to construct the building and especially the 5th floor of the same, the respondent agreed to pay to the petitioner a sum of Rs.5.10 crores as refund of the amount deposited by the petitioner along with token interest thereon. The petitioner claims that this amount was paid by way of two cheques; one for an amount of Rs.3 crores dated 22.08.2011 and the other for an amount of Rs.2.10 crores dated 28.09.2011. The petitioner claims that receipt of this amount was issued in the form of a letter dated 29.07.2011 which expressly recorded that in case the cheques are not honoured upon presentation, the terms of the MOU would be revived.
4. The petitioner further relied upon a letter dated 21.09.2011 issued by the Director of the respondent company requesting the petitioner to present the cheques on 22.10.2011 as the company was not able to pay the above amount due to some reason. The letter further records that in case the said cheques are not cleared upon presentation, the respondent will be bound to allot the space allotted to the petitioner in terms of the MOU.
5. The petitioner further claims that as the cheques were returned dishonoured upon presentation, the MOU stood revived and the petitioner was entitled to the allotment of the space in terms of the MOU. It is the case of the petitioner that as the respondent was delaying the construction of the building, the respondent agreed to pay interest for such delay and accordingly paid a sum of Rs.3.25 crores to the petitioner by way of the following cheques: -
“(a) Rs.75,00,000/- was paid on 07.05.2013;
(b) Rs.1,00,00,000/- was paid on 30.05.20 13; and
(c) Rs.l,50,00,000/- was paid on 25.06.2013.”
6. The petitioner claiming that the respondent had failed to discharge its liability to pay interest as also to allot the space in terms of the MOU, issued a legal notice dated 12.02.2015 to the respondent seeking appointment of an Arbitral Tribunal. As the respondent failed to respond to this notice, a Sole Arbitrator was appointed by this Court vide its Order dated 05.08.2015 passed in Arbitration Petition 174/2015.
7. The arbitration proceedings have resulted in the Impugned Award dated 22.08.2017, by which both parties are aggrieved and have filed their respective petitions under Section 34 of the Act.
8. The learned senior counsel for the petitioner submits that the Sole Arbitrator has completely ignored the evidence led by the parties before the Arbitrator. He submits that the MOU clearly recorded that the respondent has received the full sale consideration of Rs.5 crores and, therefore, the Arbitrator has committed an error apparent on the face of the record by holding that the petitioner is in default of payment of the sale consideration. He further submits that the petitioner had filed his affidavit of evidence before the Sole Arbitrator clearly stating that an amount of Rs.4.05 crores was actually paid in term
