Time being of the essence in a contract and the application of fundamental principles of Indian law in arbitration decisions.

V. KAMESWAR RAO, J.

CM. No. 1695/2019

Exemption allowed subject to all just exceptions.

Application stands disposed of.

FAO(OS) 07/2019

1. This appeal has been filed under Section 37 of the Arbitration & Conciliation Act, 1996 (for short ‘Act’) challenging the order dated November 28, 2018 of the learned Single Judge dismissing the petition under Section 34 of the Act challenging the Award dated October 08, 2015.

2. The brief facts are, the appellant, who, is the owner of the premises described as: Plot Nos. A-4 and A-29, Sector–9, Noida, admeasuring 1600 square meters, which includes a building constructed thereupon, admeasuring 38,000 sq.ft., had entered into a Memorandum of Understanding (‘MoU’ for short) dated June 20, 2007 with the respondent. As per the terms of the MoU, respondent was required to pay a sum of Rs. 28 lakhs per month in respect of the subject property. Furthermore, the respondent was also required to deposit a sum of Rs. 1.40 Crores towards security. The tenure of the MoU was five years with a leeway of extending it by another four years. The MoU, however, provided for a lock-in period of sixty months. A default clause was also provided in the MoU, which stipulated that in case the petitioner failed to discharge its obligations before the deadline, it would refund not only the initial consideration of Rs. 28 lakhs, but would also have to pay an equivalent sum by way of penalty. Thus, two obligations were cast upon the appellant; (i) the appellant shall hand over the building, complete in all respects along with the requisite permissions, such as Completion Certificate, by July 15, 2007; and (ii) the burden to execute a lease deed. The appellant failed to meet the deadline, and accordingly, vide communication dated August 13, 2007 sought extension of time till September 15, 2007. The appellant could not meet the extended deadline and therefore, wrote to the respondent on September 15, 2007 proposing two options (i) that the MoU could be kept alive and the subject property could be handed over to the respondent by the appellant as and when it obtained the Completion Certificate and all permissions in terms of the MoU; (ii) that the MoU could be called off; in other words, terminated. In order to show its bona fide with respect to the second option, the appellant enclosed a cheque in the sum of Rs. 28 lakhs in favour of the respondent. The purpose being that if the first option of keeping the MOU alive was not acceptable, the MoU could be brought to an end and the cheque could be en-cashed. It is noted that the respondent chose the first option given by the appellant. This was conveyed by the respondent vide communication dated September 17, 2007 and accordingly, the cheque for Rs. 28 lakhs was returned to the appellant.

3. It also appears that the appellant could not able to obtain necessary permissions, especially the completion certificate. Accordingly, the respondent vide an e-mail dated October 30, 2007, informed the appellant that its management had taken a decision not to continue with the MoU. The respondent also sought refund of Rs. 28 lakhs given to the appellant at the time of execution of the MoU. It is also noted from the record that an e-mail dated November 23, 2007 was addressed by one Mr. Sushil Jain on behalf of the appellant to Mr. Sudhir Gupta, employed with the respondent. The e-mail was sent at 2.52 p.m. and the appellant obtained a revert to the same at 2.59 p.m. from Mr. Sudhir Gupta, carrying the following pithy message, “Thanks for your mail. We are still with you”. Subsequently, correspondences were exchanged between the parties.

4. It is the case of the appellant that for the first time, on March 07, 2008, the respondent conveyed to appellant that it wished to discontinue the deal for the reason that it had found an alternate premise. The respondent appears to have communicated that this step was taken as there was delay in closing the transaction in issue. Accordingly, the respo