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2018 Supreme(Del) 1310
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
ANSAL PROPERTIES & INFRASTRUCTURE LTD. - Petitioner
Versus
NIDHI BUILDERS (I) PVT. LTD. - Respondent
O.M.P. (COMM) 351 of 2016
Decided On : 21-05-2018
For the Petitioner: Mr. Arush Khanna and Mr. Lakshay Mehta.
For the Respondent: Mr. Arvind Sharma.
The main legal point established in the judgment is that the obligations of the parties under the Collaboration Agreement, including the repayment of loans taken to acquire the property, influenced the court's decision in rejecting the petitioner's claim for refund.
Headnote:
Arbitration - Collaboration Agreement - Arbitration and Conciliation Act, 1996, Section 34 - 13(2) of the Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 - [Arbitration] - [Collaboration Agreement] - [Arbitration and Conciliation Act, 1996, Section 34, 13(2) of SARFAESI Act] - The court discussed the Collaboration Agreement and the obligations of the parties under it, as well as the provisions of the Arbitration and Conciliation Act, 1996 and the SARFAESI Act. The key legal provisions interpreted include the nature of the Agreement, the obligations of the parties, and the enforceability of the impugned award. The court's decision was influenced by its interpretation of the Agreement and the rights and obligations of the parties under it, as well as the provisions of the relevant acts.
Fact of the Case:
The petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award rejecting its claim for refund of Rs. 10 crores paid to the respondent under a Collaboration Agreement for a property. The respondent had acquired the property and the petitioner contended that it was entitled to a refund as it was deprived of any benefit from the property.
Finding of the Court:
The court found that the petitioner's claim for refund was unsustainable as the Collaboration Agreement clearly outlined the obligations of the parties, including the repayment of loans taken to acquire the property. The court rejected the petitioner's claim and dismissed the petition.
Issues: The issues involved the interpretation of the Collaboration Agreement, the nature of the petitioner's claim for refund, and the enforceability of the impugned award under Section 34 of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The court held that the petitioner's claim for refund was unsustainable as it had agreed to pay the sum in consideration for the right to develop and sell the property, and the loan taken to acquire the property had not been repaid. The court's decision was based on the interpretation of the Collaboration Agreement and the rights and obligations of the parties under it.
Final Decision: The petition was dismissed, and the court upheld the impugned award rejecting the petitioner's claim for refund of Rs. 10 crores.
VIBHU BAKHRU, J.
1. The petitioner (Ansal) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act'), inter alia, impugning the arbitral award dated 02.05.2016 (hereafter 'the impugned award') delivered by the Arbitral Tribunal constituted by a Sole Arbitrator, Mr. V.S. Aggarwal (Retired) (hereafter 'the Arbitral Tribunal'). The impugned award was rendered in the context of disputes that had arisen between the parties with respect to the 'Collaboration Agreement' dated 28.01.2008 (hereafter 'the Agreement').
2. By the impugned award, the Arbitral Tribunal has rejected Ansal's claim for refund of Rs. 10 crores paid to the respondent under the Agreement. Ansal contends that the impugned award is patently illegal as its claim for refund of Rs. 10 crores was irrefutable.
3. Briefly stated, the relevant facts necessary to address the controversy are as under :-
3.1 In December, 2006, Delhi Development Authority (DDA) invited offers for purchase of freehold commercial plots at four locations in Delhi including Plot No. 9, Sector 20, Part II, Dwarka, New Delhi (hereafter 'the Property').
3.2 On 16.01.2007, the respondent submitted its bids pursuant to the above invitation for an amount of Rs. 18,32,00,000/- and deposited initial Earnest Money of an amount of Rs. 4,60,00,000/- to DDA.
3.3 On 04.05.2007, DDA accepted the respondent's bid and issued a letter to the said effect. The initial Earnest Money of Rs. 4,60,00,000/- deposited by the respondent was arranged by way of a secured loan from Syndicate Bank (hereafter 'the Bank') by providing an undertaking to mortgage the Property with the Bank.
3.4 On 28.01.2008, the bank disbursed a loan of Rs. 5,84,82,075/- to the respondent, which it is stated was utilized to make payment of a part of the consideration payable for the Property. The respondent required a further amount of Rs. 10 crores to be paid to DDA as the balance consideration for the Property. In this backdrop, the parties entered into the Collaboration Agreement ('the Agreement'), whereby Ansal was to make the balance payment of Rs. 10 crores to DDA, inter alia, in consideration for the right to develop, construct, sell and alienate the Property.
3.5 On 28.01.2008, the Bank consented that it had no objection for the parties to enter into the Agreement.
3.6 Thereafter, the respondent executed Power of Attorney and General Power of Attorney in favour of Ansal empowering Ansal to act on behalf of the respondent and to have the exclusive right to sell, mortgage, alienate the Property.
3.7 On 28.02.2008, the Property was conveyed in favour of the respondent. Thereafter, on 06.03.2008, Ansal took possession of the Property. The respondent was under an obligation to keep the Property free and saleable; however, Ansal could offer the Property for sale and the proceeds were to be utilized to pay the Bank.
3.8 The respondent defaulted in the repayment of the loan amount and as the Bank was contemplating enforcement of its security interest, the respondent suggested that the Property be sold. On 29.05.2008, Ansal issued a letter stating that the rights would be assigned with respect of the Property in favour of the new buyer only on receipt of entire payment that is, an amount of Rs. 10 crores.
3.9 On 02.03.2009, the Bank issued a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (SARFAESI Act), as the account of the respondent was declared as a Non-Performing Asset (NPA).
3.10 On 15.04.2009, Ansal issued a letter requesting the respondent to clear dues and settle the matter and to not create any third party rights in the Property.
3.11 In August, 2011, the Bank filed an Original Application bearing O.A. No. 7/2010 before the Debts Recovery Tribunal-II (DRT) for recovery for a sum of Rs. 24,17,11,166.20/-. Thereafter, the respondent filed an application praying that the Property be sold by way of publ
