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2021 Supreme(Del) 1589
IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Airwil JKM Infracon Pvt. Ltd. - Appellant
Versus
Cadillac Infotech Private Ltd - Respondent
Original Miscellaneous Petition (COMM) No. 490 of 2018, Miscellaneous Application No. 16600 of 2018, 8557 of 2021
Decided On : 29-11-2021
Saurabh Kirpal, Advocate, Saket Sikri, Advocate, Manik Dogra, Advocate, Davinder Singh, Advocate, Ajay Pal Singh Kultar, Advocate, Arun Rathi, Advocate, Harish Malhotra, Advocate, Kartik Yadav, Advocate, Manhar Singh Saini, Advocate, Karanvir Singh Goraya, Advocate, Sumedha Sumedha, Advocate
The main legal point established in the judgment is that the rejection of evidence and denial of opportunity to present the case by the Arbitral Tribunal were unfounded. Additionally, the assessment of damages by the Arbitral Tribunal was found to be unsustainable and contrary to the principles of law.
Headnote:
Arbitration and Conciliation Act - Arbitral Award - Property Development Agreement - Summary
Fact of the Case:
The petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award delivered by an Arbitral Tribunal. The disputes arose from a Property Development Agreement (PDA) between the parties for the development of a property in Noida. The petitioner failed to pay the agreed amount within the stipulated period, leading to termination of the PDA by the respondent. The respondent sought possession of the property and claimed damages for unauthorized use and occupation.
Finding of the Court:
The court found that the Arbitral Tribunal rejected the evidence produced by the petitioner, including a receipt acknowledging the deposit, on the grounds that it was produced at a belated stage and did not align with the petitioner's pleadings. The court also noted that the Arbitral Tribunal denied the petitioner a full opportunity to present its case and rejected the claim that the PDA was a sequel to a prior Memorandum of Understanding (MOU). The court further found that the Arbitral Tribunal's assessment of damages at Rs. 20 lacs per month in favor of the respondent was unsustainable and contrary to the principles of law.
Issues: The issues in the case included the rejection of evidence, denial of opportunity to present the case, the relationship between the PDA and the MOU, and the assessment of damages by the Arbitral Tribunal.
Ratio Decidendi: The court held that the rejection of evidence and denial of opportunity to present the case by the Arbitral Tribunal were unfounded. The court also found that the assessment of damages by the Arbitral Tribunal was unsustainable and contrary to the principles of law.
Final Decision: The court set aside the arbitral award to the limited extent that it directed payment of a sum of Rs. 20 lacs per month from 18.07.2015, in favor of the respondent and against the petitioner for the unauthorized use and occupation of the Subject Land.
JUDGMENT
Vibhu Bakhru, J. - The petitioner (hereinafter referred to as AJIPL) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 impugning an arbitral award dated 16.10.2018 (hereafter the impugned award) delivered by an Arbitral Tribunal constituted by Justice (Retired) Sh Sudhir Kumar Katriar, a former Judge of the Patna High Court as the Sole Arbitrator (hereafter the Arbitral Tribunal). The arbitral proceedings were conducted under the aegis of the Delhi International Arbitration Center (DIAC) and in accordance with its rules.
2. In terms of the impugned award, AJIPL has been directed to hand over vacant and physical possession of the property bearing plot nos. 1, 2, 10, 11 and 12 measuring 20,000 sq. meters situated in Sector 135, Noida, District Gautam Budh Nagar, Uttar Pradesh (hereafter the Subject Land) to the respondent (hereafter CIPL) within a period of four weeks from the date of the award. In addition, the Arbitral Tribunal has awarded CIPL an amount of Rs. 20,00,000/- per month with effect from 18.07.2015 till the date of payment along with simple interest at the rate of 9%, as damages resulting from AJIPL retaining possession of the Subject Land. The Arbitral Tribunal has further directed CIPL to refund the amount of Rs. 8,22,56,500 (Rupees Eight Crores, Twenty-Two Lakhs, Fifty Six Thousand and Five Hundred) along with 9% simple interest for the period with effect from 18.07.2015 till the date of payment and, has further directed that this amount be adjusted against the amount awarded in favour of CIPL. The Arbitral Tribunal has also awarded costs of arbitration quantified at Rs. 25,00,000/- along with interest at the rate of 9% from the date of the award till the date of the payment in favour of CIPL.
Factual Background
3. The disputes between the parties arose in connection with a Property Development Agreement dated 06.09.2014 (hereafter the PDA), which was entered into between the parties for development of the Subject Land. The parties had agreed that AJIPL would develop an IT Project on the Subject Land, which would include structures, buildings, recreational areas, open spaces, parking spaces, landscaping, developments, etc. in accordance with the plans sanctioned by the concerned authority (hereafter the Project).
4. AJIPL holds leasehold rights in respect of the Subject Land in terms of lease deed(s) executed by New Okhla Industrial Development Authority (NOIDA) in favour of AJIPL. The Subject Land was allotted by NOIDA for setting up buildings for IT and IT Enabled Services.
5. In terms of the PDA, AJIPL was granted the exclusive development rights in respect of the Subject Land. It was agreed that AJIPL would develop the Project and the parties would share the gross sale revenue in a specified ratio: AJIPL was entitled to 53.75% of the gross sales revenue generated from the sale/allotment of the saleable area of the Project and CIPL was entitled to the remaining 46.25% of the gross sale revenue.
6. In terms of Clause 4 of the PDA, AJIPL agreed to pay a sum of Rs. 15,00,00,000/- (Rupees Fifteen Crores only) to CIPL as deposit. Out of the aforesaid sum, Rs. 10,00,00,000/- was agreed to be interest-free refundable deposit and the remaining Rs. 5,00,00,000/- was agreed to be a non-refundable deposit. Against the aforesaid amount, AJIPL paid a sum of Rs. 1,00,00,000/- and CIPL acknowledged its receipt in the PDA. It was agreed that the remaining amount would be paid within forty-five days of signing of the PDA. Clause 4 of the PDA is set out below: -
"4. DEPOSIT
4.1. As security towards compliance of its obligations under the Development Agreement, the Developer agrees to pay to Owner a sum of Rs.15,00,00,000/- (Rupees Fifteen Crore Only) out of which Rs.10,00,000/- ten crore only) shall be the interest free refundable deposit ("Refundable Deposit") whereas the remaining Rs.5,00,00,000/- (Rs. Fifteen Crore only) shall be the non refundable deposit (Non Refundable Deposit
