Important Point – An arbitral award is liable to be set aside if there is an error of law by Arbitrator.

1. Impugned in both Arbitration Applications is the Award dated 27th January 2012, passed by the Arbitrator, appointed by this Court vide order dated 5th June 2009 in A.A. no.32/2008. Applications are taken ad seriatim.

A.A. No. 12/2012

2. Respondents plead that they approached petitioners with a proposal that respondents were owning an industrial plot of land admeasuring 08 Kanals situated at SIDCO Industrial estate, Bari Brahmana, Jammu, which respondent no.1 had acquired by means of a lease for a period of 90 years from J&K SIDCO vide registered Lease Deed dated 16th December 1995. Respondents also represented to petitioners that respondent no.2 is permanently registered SSI Unit and had a sanctioned power load of 1,000 KVA vide PDD Order no.289 of 1995 dated 29th September 1995. Respondents, it is averred, further represented that they were holding another industrial plot of land admeasuring 16 Kanals situated in SIDCO Industrial Estate, Bari Brahmana, Jammu, on lease hold basis in favour of respondent no.1, for which respondent no.2 was fully authorised to enter into a Memorandum of Understanding with petitioners. Based upon the representation made by respondents, petitioners agreed to purchase leasehold rights in respect of two Industrial Plots admeasuring 08 Kanals and 16 Kanals situated in SIDCO Industrial Estate, Bari Brahmana, Jammu, for total consideration of Rs.4.61 Crores, subject to the condition that respondent no.2 would get the leasehold rights transferred to a company to be formed and subject to further condition that respondents were able to get the power connection of 1000 KVA changed in the name of the said company to be formed and the purpose of use of said power connection changed to induction furnace for steel melting and that permission would be granted to change existing shareholders and directors of aforesaid company to be formed and subject to further condition that respondents would get permission of land existing in favour of respondent no.1, transferred in favour of said company to be formed in which ultimately petitioners were to be shareholders and directors. Accordingly, a memorandum of understanding dated 18th March 2008 was executed between parties and as provided under said MOU, petitioners paid a sum of Rs.1.01 crore to respondents immediately on signing of said MOU and balance sum was to be paid. In terms of MOU, in addition to a sum of Rs.1.01 crore already paid on signing aforesaid MOU, another sum of Rs. 1.85 crores, was to be paid by petitioners to respondents upon fulfilment of various conditions. According to petitioners, balance sum of Rs.1.75 crore was to be paid by petitioners within 21 days of the grant of permission for transfer of land belonging to respondent no.1 in favour of company taken over by petitioners and against delivery of physical vacant possession of said property to petitioners or aforesaid company to be formed which by then shall belong to petitioners. Despite the fact that petitioners had paid a sum of Rs.1.01 crore to respondents till execution of MOU which was executed as far as back on 18th March 2008, respondents have miserably failed to take steps as were otherwise envisaged under said MOU dated 18th March 2008, inasmuch as respondents failed to form company/intimate to petitioners about its formation as was to be done immediately after execution of said MOU and further failed to take any permission/NOC from power department for using connection of 1000 KVA for new activity i.e. steel melting and for transfer of said connection in the name of private limited company so formed for new line of activity, i.e. steel melting and that respondents further failed to take any permission for new line of activity, i.e. steel activity.

3. Further submission of petitioners is that as a result of delays caused by respondents, industrial policies, which were in vogue at the time of execution of MOU dated 18th March 2008, and which were in fact very basis of petiti