The restricted scope of jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, and the court's inability to re-appreciate evidence on merit.

JUDGMENT

Navin Chawla, J. (Oral)--This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `Act') challenging the Arbitral Award dated 25.05.2010 passed by the learned Sole Arbitrator.

2. It is the case of the petitioners that by an Agreement to Sell dated 15.11.1996, the petitioners had purchased from the respondent, the basement floor admeasuring approximately 17'x54' sq. ft. of property bearing no. 8/972, in Khasra No. 78 at Govindpuri, Kalkaji, New Delhi-110019 (hereinafter referred to as the `subject property') for a total sale consideration of Rs.2,90,000/-. It was specifically warranted in the Agreement to Sell by the respondent that the subject property is free from all sorts of encumbrances. Clause 3 of the Agreement to Sell provides as under:

"3. That the First Party has assured the Second Party that the said basement is free from all sorts of encumbrances i.e. mortgages, court injunctions, attachments, disputes, gifts, wills, exchanges etc. and if it is ever proved otherwise the First Party shall be liable and responsible for the same."

3. At the time of the handing over of the possession to the petitioners, the construction of the upper floors of the building was still going on. The same resulted in reduction of the frontage of the basement, which was supposed to be 17ft., to 8ft. on account of construction of staircase to the above floors. The frontage got further reduced to 5 1/2 ft. when the upper ground floor was sold to a third party and some stairs were constructed for the ingress and egress from the shop located on the ground floor.

4. The petitioner further claimed that the respondent misrepresented the total plot area of the building which was, in fact, constructed on a certain portion of encroached Government land. It was stated that the building has been constructed on 330 sq. yds., whereas the respondent himself, in his property tax returns filed in 2004, had shown the plot area to be 214 sq. yds. In the year 2006, the Public Works Department (in short, `PWD'), vide a notice dated 29.05.2006 informed that the building was constructed upon encroached Government land and, therefore, the staircase leading up to the basement of the property was liable to be demolished. Later, due to the construction of the road by the PWD, the ingress and egress from the basement floor was almost completely blocked, as is evident from the photographs that have been filed before the learned Arbitrator.

5. The petitioners also claimed that there were leakages in the sewage pipe in the portion occupied by the respondent, causing severe damages to the goods of the petitioner. In spite of the request, the respondent refused to repair the same.

6. The learned counsel for the petitioner submits that the fact of encroachment is also evident from the valuation of the property obtained by the respondent which is based on the area of land to be 265 sq. yds., whereas the Sale Deed in favour of the respondent itself showed that the area of land was only 214 sq. yds. He submits that the respondent, therefore, had encroached upon the public land and due to the action of the PWD removing such encroachment, it was the petitioners who suffered the loss.

7. The learned counsel for the petitioners further submits that the learned Arbitrator has erred in holding that the petitioners have been unable to prove the loss suffered by them. He submits that the loss was self-evident, inasmuch as the basement could not be now put to any use.

8. He further submits that in the arbitration proceedings, the respondent had refused to pay the fee of the Arbitrator. The petitioner was forced to pay even the share of the fee of the respondent, which the Arbitrator has failed to get reimbursed to the petitioners in the impugned Award.

9. On the other hand, the learned counsel for the respondent submits that by way of the Agreement to Sell, the respondent had sold the basement floor admeasu