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IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Imaging Solutions Private Limited - Plaintiffs
Versus
Hughes Communications India Limited - Defendants
O.M.P. (COMM) 506 of 2018 and I.A. No. 17190 of 2018
Decided On : 26-04-2023
ARBITRATION - SECTION 34 - PUBLIC POLICY - PATENT ILLEGALITY - SCOPE OF INTERFERENCE - COURT'S ANALYSIS AND CONCLUSION - AWARD UPHELD.
Fact of the Case:
A dispute arose between the petitioner (landowner) and the respondent (tenant) over a lease agreement for a plot of land. The respondent exercised its option to purchase the land, but the petitioner refused, claiming that HUDA did not permit the sale and transfer of the property. The respondent initiated arbitration proceedings, and the Arbitral Tribunal awarded the respondent compensation for the alleged cost of building, fixtures, and equipment. The petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that the award was in conflict with public policy and that the Arbitrator exceeded its jurisdiction.
Finding of the Court:
The Court held that the Arbitrator's award was well-reasoned and within its jurisdiction. The Court found that the Arbitrator had considered all the relevant evidence and documents and had not acted perversely or in violation of the Arbitration Act. The Court also held that the award was not against public policy or the fundamental policy of Indian law. Therefore, the Court dismissed the petition to set aside the award.
Issues: 1. Whether the Arbitrator went beyond the scope of the contract and awarded compensation to the respondent without any claim for the same. 2. Whether the impugned award is patently illegal and in conflict with the public policy of India.
Ratio Decidendi: 1. The Court held that the Arbitrator did not exceed its jurisdiction by awarding compensation to the respondent. The Court found that the Arbitrator had considered the relevant provisions of the lease agreement and had acted within its authority in awarding compensation for the respondent's expenses in constructing the building on the land. 2. The Court held that the impugned award was not patently illegal or in conflict with the public policy of India. The Court found that the Arbitrator had considered all the relevant evidence and documents and had not acted perversely or in violation of the Arbitration Act. The Court also held that the award was not against public policy or the fundamental policy of Indian law.
Final Decision: The Court dismissed the petition to set aside the Arbitral award.
JUDGMENT :
CHANDRA DHARI SINGH, J.
FACTUAL MATRIX
1. The present petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, to challenge the impugned Awarded dated 4th August 2018, passed by the Learned Sole Arbitrator wherein the Learned Sole Arbitrator Awarded a sum of Rs. 7.5 Crores with interest @12% p.a. in favour of the Respondent.
2. On 3rd June 1997, the petitioner was allotted land in Plot No. 1, Sector 18, Electronic City, Gurgaon, Haryana admeasuring 1000 sq. meters by Haryana Urban Development Authority (HUDA) and the petitioner on 17th March 1999 issued a letter offering the plot on lease to the respondent.
3. Between 20th February 1999 to 6th December 1999 various letters/mails were sent by the petitioner to the respondent for letting out of the plot with entitlement to the respondent to construct a building thereon, with an option to purchase the plot subject to permission of law and on 14th February 2000, power of attorney was granted by the petitioner to the respondent and the Lease Deed was executed between the parties for a period of 20 years.
4. On 8th November 2000, the petitioner informed the respondent that additional 200 sq. meters of land has been obtained by it in the subject property and on 10th October 2000, the petitioner secured the possession of 1200 sq. meters from HUDA vide Possession Letter/Possession Certificate dated 10th October 2000. On 23rd March 2001, Lease Deed was entered into between the parties for a pre-determined consideration of INR 1.5 Crores.
5. On 2nd January 2003, HUDA provided the inspection report of the said property enumerating violations on construction and vide Memo dated 29th January 2003, HUDA demanded compounding fee for illegal construction by the respondent on the subject property.
6. On 24th March 2003, the petitioner obtained Conveyance Deed for the additional area of 200 sq. meters of land in the subject property and Occupancy Certificate was granted to the petitioner on 1st September 2003 by the Estate Officer, Gurgaon.
7. The respondent vide letter dated 27th July 2006, the respondent exercised its option to purchase the subject property and the petitioner intimated the respondent that HUDA does not permit sale and transfer of the subject property and further informed the respondent that 2nd show-cause notice has been issued by HUDA due to the illegal construction by the respondent.
8. On 2nd January 2007, the respondent wrote several times to the petitioner vide letters dated 29th March 2007, 30th April 2007, and 15th May, 2007, asking to get approval from HUDA to register the Sale Deed enclosing the draft Sale Deed along with the letters.
9. The respondent through its counsel issued Notice to the respondent asking to discharge its obligation under the Lease Deed dated 23rd March 2001 and subsequently invoked Arbitration Clause on 8th February 2008, vide letter to the Learned Arbitrator.
10. The arbitration proceedings commenced and the Statement of Claim was filed by the respondent along with the application for direction with respect to payment of balance sale consideration on 28th May 2008 and vide Notice dated 2nd July 2009, the petitioner allegedly terminated the Lease Deed dated 23rd March 2001 and revoked the General Power of Attorney dated 14th February 2000.
11. Various show-cause notices dated 8th August 2001 and 28th June 2012 were issued by HUDA to the parties stating violations of HUDA regulations due to illegal construction of the subject property and vide Order dated 26th November 2012, the Estate Officer-I ordered to take actions to correct violations according to the HUDA guidelines.
12. The petitioner on 19th July 2011 filed an application before the Leaned ADJ, Gurgaon for termination of the mandate of the Learned Arbitrator under Section 14 of the Arbitration and Conciliation Act, 1996 which was dismissed by the Learned ADJ vide Order dated 2nd December 2011. The Order of the Learned ADJ was set aside by the High Court of Pun
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