Arbitrators have discretion in awarding interest, and findings of breach by both parties can justify lower interest than contractually stipulated rates.

JUDGMENT

Sanjeev Narula, J. (Oral)--The present petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter, the `Act'] impugning the Award dated 19th March 2020 passed by a Sole Arbitrator appointed for adjudicating disputes arising out of an Agreement for Development dated 01st July, 2015 [hereinafter, `Agreement'] executed between the Respondent - M/s Grand Reality Pvt. Ltd. (Claimant in arbitration) and the Petitioner herein - Shri Nanak Mehta (Respondent in arbitration) for construction of Country Homes/Villas on agricultural land (admeasuring 15 Bighas and 4 Biswas) bearing Khasra Nos. 113/23/2 (5-12), 24 (4-16), 25/1 (2.08), 25/2 (2-08) situated in Village Bijwasan, Tehsil Vasant Vihar, New Delhi [hereinafter, "Demised Land"].

2. At the outset, it must be noted that vide Judgment dated 23rd December 2021 in O.M.P (COMM) 33/2021, a challenge to the impugned Award, at the instance of the Respondent herein, has been rejected.

3. The facts of the case have been recounted in the aforenoted judgment and the same shall be deemed to be part of the present order. For the sake of brevity, in a nutshell, the dispute between the parties was as follows:

3.1. A Development Agreement dated 01st July, 2015 was executed between the parties for development of Demised Land owned by the Respondent. In terms of the Agreement, a sum of Rs.2,04,85,000/- was paid to the Respondent (including payment of Rs.84,50,000/- paid directly to the Bank at the behest of the Petitioner). The Respondent failed to comply with the condition precedent of handing over the vacant physical possession of the property to the Petitioner after getting the title cleared, on or before 07th April, 2016.

3.2. The Respondent sent a legal notice allegedly terminating the Development Agreement. In any event, the Petitioner also terminated the Development Agreement in terms of Clause 8 of the Development Agreement vide legal notice dated 03rd April, 2018. In such circumstances, Petitioner contended that Respondent became liable to refund the amount received, along with interest @ 24 % p.a.

Proceedings under Section 9 of the Act:

3.3. Petitioner Company preferred a petition under Section 9 of the Act, ¹ , to preserve the sub-stratum of the Development Agreement. The Court vide order dated 01st August, 2018, restrained the Respondent from creating any third-party interest or parting with the possession of the Demised Land, till the Respondent deposits a sum of Rs.2.05 crores with the Registry of this Court in the form of Fixed Deposit Receipt (FDR). The said sum was deposited by the Respondent, as recorded in order dated 06th September, 2018.

Award:

3.4. On 06th September, 2018, this Court appointed Mr. S.M Chopra, Retired Additional District Judge, as the Sole Arbitrator. The proceedings culminated in an Award on 19th March, 2020, holding the following:

(i) The Petitioner herein shall pay to the Respondent herein Rs.2,04,85,000/- from the proceeds of FDR No. 12452596 dated 14th August, 2018, deposited with ICICI Bank, Gurugram, with lien marked by Registrar General of the Court.

(ii) Petitioner shall pay to the Respondent interest to the extent of the difference between Rs.2,04,85,000/- and the principal amount of the FDR of Rs.2,05,00,000/- and the interest accrued on the said FDR till realization by the Respondent herein towards the satisfaction of the Award.

(iii) In view of the lien marked in favour of the Registrar General of this Court on the aforesaid FDR, the Respondent to take appropriate steps before this Court towards the satisfaction of the Award.

4. Mr. Akshay Makhija, Senior Counsel for the Petitioner, states that c