Arbitration proceedings validly commenced under Section 21 of the Arbitration Act on notice dated 20.08.1992; findings on completion and cost claims affirmed due to lack of evidence.

JUDGMENT :

AJAY DIGPAUL, J.

1. By way of the present appeal preferred under Section 37 of the Arbitration and Conciliation Act, 1996 [Hereinafter “A&C Act”] the appellants have challenged the judgment dated 21.05.2025 [Hereinafter “impugned judgment”] passed by the learned District Judge (Commercial Court)-02, South, Saket Courts, Delhi [Hereinafter “Commercial Court”] in OMP (Comm.) No. 7/2020.

2. The learned Commercial Court, vide the impugned judgment, while holding that the arbitral award dated 02.11.2019 [Hereinafter “arbitral award”] passed by Justice Indermeet Kaur (Retd.) [Hereinafter “Arbitrator”] does not suffer from any infirmity, illegality or perversity, nevertheless proceeded to set aside the arbitral award whereby appellant no.2 had been fastened with liability for the obligations of appellant no. 1.

Factual Matrix

3. The dispute between the parties, namely Mr. Jatinder Nath [Hereinafter “respondent”] and appellant no. 1, a company engaged in the business of real estate and represented through its director, appellant no. 2, arises out of protracted litigation spanning a long period of time. During the pendency of the proceedings, both the respondent and appellant no. 2 expired, and were thereafter substituted and represented by their respective legal heirs/successors.

4. The respondent, owner of property bearing Municipal no. G-13, Malviya Nagar Extension, Saket, New Delhi, admeasuring 400 sq. yds. [Hereinafter “subject property”] entered into an agreement dated 16.03.1990 [Hereinafter “agreement”] with appellant no. 1.

5. The subject property had been allotted to the respondent by the Delhi Development Authority vide a perpetual lease dated 17.08.1981.

6. Under the said agreement, the appellants were to construct a multistoried building at its own cost, and upon completion, was to retain the basement, ground and mezzanine floors with proportionate rights in the land, while the first floor and second floor were to vest with the respondents. The construction was to be completed within the stipulated period, failing which the owner was entitled to terminate the said Agreement and retain the land and structure, subject to payment of construction cost to the appellants.

7. The building plans were sanctioned by the Municipal Corporation of Delhi on 21.05.1990 and construction was undertaken by the appellants. Disputes arose between the parties regarding alleged deviations and excess construction, leading to sealing of the premises by the municipal authorities and multiple proceedings before various fora.

8. During this period, the appellants inducted Mr. P.K. Mathur and Mr. Pramod Dang into front portions of ground floor and basement of the premises, respectively, which was objected to by the respondents, who consequently sought termination of the agreement and recovery of possession. The disputes led to invocation of arbitration before the named Arbitrator, Mr. Damodar Sharma, in August 1992, culminating in an ex-parte award dated 29.03.1994 in favour of appellant no. 1. In terms of this award, Mr. Damodar Sharma directed the respondents to transfer the ownership of the basement, and ground floor along with the proportionate interest in the land underneath and, in lieu of mezzanine floor, the respondents were directed to transfer ownership of first floor to the appellants.

9. In the interregnum, Mr. P.K. Mathur instituted a suit seeking to restrain the respondents from dispossessing him. The said suit came to be dismissed vide order dated 24.01.1995. Similarly, Mr. Pramod Dang