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2020 Supreme(Del) 1295
IN THE HIGH COURT OF DELHI AT NEW DELHI
Vipin Sanghi, Sanjeev Narula, JJ.
V4 Infrastructure Pvt. Ltd. - Appellant
Versus
Jindal Biochem Pvt. Ltd. - Respondent
First Appeal From Order (O S) (C O M M) No. 107 of 2018, 108 of 2018; Civil Miscellaneous No. 20269 of 2018, 49639 of 2019, 20272 of 2018, 49347 of 2019
Decided On : 05-05-2020
Sandeep Sethi, Advocate, S.K. Chaturvedi, Advocate, Amit Sood, Advocate, Dinesh Singh, Advocate, Sanjiv Anand, Advocate, Amit Dubey, Advocate, Vikas Kakkar, Advocate
The main legal point established in the judgment is the court's authority to intervene and modify an arbitral award when the rate of interest awarded is found to be unjustified and unreasonable.
Headnote:
Arbitration - Space Buyer Agreements - Arbitration and Conciliation Act, 1996 - Section 34 - 19.03.2018 - Summary of the acts and sections referenced and discussed by the court: The judgment discusses the Space Buyer Agreements under the Arbitration and Conciliation Act, 1996, specifically focusing on the termination notice, construction of the basement, and the claim for specific performance. The court analyzes the claims made by the parties and the relief granted by the Arbitral Tribunal, highlighting the contradictions in the findings and the erroneous premise for awarding interest at 18% p.a. The court ultimately reduces the interest rate to 9% p.a.
Fact of the Case:
VIPL purchased a property and entered into Space Buyer Agreements with JBPL. Disputes arose regarding possession and termination of the agreements. The Arbitral Tribunal awarded refund of the amount paid by JBPL with interest at 18% p.a. The Appellant assailed the award under Section 34 of the Act, claiming the premise of the award was flawed. The court dismissed the objection petitions and upheld the award.
Finding of the Court:
The court found that the award of interest at 18% p.a. was unjustified and reduced it to 9% p.a. The court highlighted the contradictions in the findings and the erroneous premise for awarding interest, ultimately allowing the appeals and modifying the award.
Issues: The main issue was the rate of interest awarded by the Arbitral Tribunal on the refunded amount, which the court found to be unjustified and reduced to 9% p.a.
Ratio Decidendi: The court's decision was influenced by the erroneous premise for awarding interest at 18% p.a. and the contradictions in the findings, ultimately leading to the modification of the award.
Final Decision: The court allowed the appeals and modified the award by reducing the interest rate to 9% p.a.
JUDGMENT
Sanjeev Narula, J. - By way of thisjudgement, weshall dispose of the above-noted appeals preferred against the common order dated 19.03.2018, whereby Appellant''s (VIPL) objection petitionsunder Section 34 of the Arbitration and Conciliation Act, 1996, (hereinafter ''the Act'')have been rejected, and common arbitral award dated 20.05.2017 stands confirmed.This impugned arbitralaward deals with two separate claim petitions preferred by the Appellant relating to respective Space Buyer Agreements(hereinafter ''arbitration agreements'')concerning separate portions of same property. Since the objection petitions have been disposed of vide a common judgment, wealso consider it convenient to dispose of theappeals vide a common judgement.
2. The facts of the present case have been elaborately noted by the Sole Arbitrator in the impugned award and also by the learned Single Judge in the impugned judgment. Since there is not much dispute about the same, and furthermore as scope of the surviving controversy encapsulated hereinafter is narrow, we need not recount the entire facts and rather verbatim note from the impugned judgment only thosewhich are essential, for the disposal of the present appeals. The same read as follows: Brief Facts:
"4. VIPL purchased the property bearing no. 228, Sector 9, Service Centre, Dwarka admeasuring 540 square meters in an auction conducted by the Delhi Development Authority (DDA). At the material time, VIPL was in the nature of a joint venture between two groups, namely, Attar Singh Group and Jindal Group. Both the said groups had equal representation on the Board of Directors of VIPL. Certain disputes arose between the two groups and the Jindal Group exited from the control and management of VIPL. VIPL further claims that the two share purchase agreements dated 25.08.2009 and 30.08.2009 were entered into between its shareholders of VIPL belonging to the said groups. It is further claimed that the said share purchase agreements have attained finality. However, the controversy, if any, relating to the said share purchase agreements is not relevant for the purposes of the present proceedings.
5. VIPL and JBPL entered into two Space Buyer Agreements in relation to the Property. The First Agreement pertains to the sale of three shops bearing Unit Nos. 1, 2 and 3 on the front side of the ground floor aggregating 936.409 square feet of covered area, which was agreed to be sold to the JBPL at a consideration of Rs. 4.25 crores. In terms of the Second Agreement, VIPL agreed to sell 1435.758 square feet on the second floor of the Property at a consideration of Rs. 3.15 crores.
6. Admittedly, JBPL paid the entire consideration as agreed under the two Space Buyer Agreements. JBPL claimed that VIPL had initially handed over the possession of the built up space purchased in terms of the said two agreements but had forcibly re-possessed the same by breaking open the locks. VIPL disputes the same and claims that the Property was completed and an occupancy certificate was granted on 19.04.2010 but the physical possession of the Property was not handed over to JBPL as JBPL failed and neglected to pay the maintenance charges and to execute the agreement for maintenance of the Property (Maintenance Agreement). VIPL further claims that JBPL also failed to pay proportionate charges for installation of a lift.
7. VIPL terminated the two Space Buyer Agreements by letter dated 19.08.2011 on the alleged ground of failure on the part of JBPL to pay the proportionate charges for installation of the lift and to execute the Maintenance Agreement.
8. In the aforesaid context, the disputes between the parties were referred to arbitration. In the Statement of Claims filed before the Arbitral Tribunal, JBPL claimed for specific performance of the Space Buyer Agreements as well as damages for failure to handover possession of the Property along with interest. JBPL also sought rendition of accounts. In the alternative, JBPL claimed
