IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
M/s. Color Home Developers Pvt. Ltd., Rep. by its Managing Director D. Ramesh - Appellant
Versus
M/s.Color Castle Owners Society, Rep. by its Secretary Murugesan - Respondent
Arb.O.P.(Com.Div.) No. 157 of 2022
Decided On : 05-04-2022
Arbitration Original Petition - Arbitration and Conciliation Act, 1996 - Section 34(2)(a) IV and V - Summary of Acts and Sections: The court discussed the appointment of a sole arbitrator under Section 11(6) of the A and C Act, the claims made under 16 heads, issues framed by the Arbitral Tribunal, and the operative portion of the impugned award. The court also highlighted the legal provisions of the A and C Act, emphasizing the limited scope of judicial intervention under Section 34 and the finality of arbitral awards under Section 35.
Fact of the Case:
The case involved a dispute between a Developer/Builder and a Society formed by home buyers over construction defects and other issues. The Society invoked an arbitration clause, leading to the appointment of a sole arbitrator who made an award in favor of the Society. The Builder challenged the award in the Arbitration Original Petition.
Finding of the Court:
The court found that the challenges raised by the Builder did not fit into the legal slots for intervention under Section 34 of the A and C Act, emphasizing the limited scope of judicial intervention and the finality of arbitral awards.
Issues: The issues included the competence of the Secretary of the Society to file claims, refund of corpus fund, construction defects, and interest provided for in the contract.
Ratio Decidendi: The court emphasized the limited scope of judicial intervention under Section 34 of the A and C Act, highlighting the finality of arbitral awards and the need for due process of law.
Final Decision: The Arbitration Original Petition was dismissed, and no costs were awarded.
JUDGMENT
(Prayer: Original Petition filed under Section 34(2)(a) IV and V of the Arbitration and Conciliation Act, 1996 praying to
(a) Set aside the Arbitral Award dated 29.07.2021 in A.F.No.208 of 2019 on the file of sole Arbitrator Mr.S.Rajasekar, Advocate;
(b) Direct the respondent to pay the costs;)
1. Captioned 'Arbitration Original Petition' [hereinafter 'Arb OP' for the sake of convenience and clarity] has been presented in this Court on 29.10.2021 assailing an 'arbitral award dated 29.07.2021 bearing reference No.A.F.No.208 of 2019' [hereinafter 'impugned award' for the sake of convenience and clarity].
2. Short facts shorn of elaboration will suffice as this is a Section 34 legal drill under 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)', [hereinafter referred to as 'A and C Act' for the sake of brevity]. To be noted, there will be a little elaboration on this legal drill under Section 34 elsewhere infra in this order.
3. Be that as it may, short facts shorn of elaboration are that the lis is between Developer/Builder who put up/constructed about 100 residential apartments in a project which was named 'Color Castle' [hereinafter 'said project' for the sake of convenience and clarity]; that this Court is informed that these 100 odd apartments in said project are in 11 blocks of 8 apartments and 3 blocks of 4 apartments each; that the residential apartments were constructed and handed over to the respective home buyers is not in disputation; that the home buyers of these 100 odd apartments formed a Society in the name and style 'Color Castle Owner's Society' [hereinafter 'said owner's Association' for the sake of convenience and clarity]; that this Court is informed that said owner's Association is registered under Tamil Nadu Societies Registration Act, 1975; that post completion of construction and handing over of the same, certain disputes arose between said owner's Association and 'petitioner-Company' [hereinafter 'builder' for the sake of convenience and clarity]; that disputes largely pertain to certain defects in the construction; that there were other incidental and collateral issues such as refund of corpus fund; that contending that there is an arbitration clause in the construction agreement dated 15.03.2014, said owner's Association approached this Court under Section 11(6) of A and C Act and this Court in and by an order dated 17.09.2019 in O.P.No.554 of 2019 appointed a learned member of the Bar of this Court as sole arbitrator to enter upon reference qua arbitration and render an award in accordance with Madras High Court Arbitration Proceedings Rules, 2017; that sole arbitrator entered upon reference and made the impugned award; that before sole arbitrator, said owner's Association as claimant made claims under as many as 16 heads of claims; that vide the impugned award 10 heads of claims were allowed but 6 heads of claims were rejected; that sole arbitrator appointed a qualified civil engineer, made an assessment of construction and took the report into account in making the impugned award; that the builder has now come up with the captioned Arb OP assailing the impugned award.
4. Before proceeding further, this Court deems it appropriate to extract and reproduce the following:
(a) Order of this Court dated 17.09.2019 made in O.P.No.554 of 2019 (appointing sole arbitrator);
(b) 16 heads of claims as culled out from the claim statement;
(c) Issues framed by Arbitral Tribunal [AT];
(d) Operative portion of the impugned award wherein 10 heads of claims have been allowed;
5. Reproduction of aforementioned four facets of the matter on hand are as follows:
a) Order of this Court dated 17.09.2019 made in O.P.No.554 of 2019.
(appointing sole arbitrator)
'This Original Petition is filed seeking for the appointment of a Sole Arbitrator to decide the disputes that have arisen between the petitioner and the respondent under the Construction Agreement dated 15.03.2014.
2. According t
The judgment emphasizes the limited scope of judicial intervention under Section 34 of the A and C Act and the finality of arbitral awards.
Judicial review of arbitral awards is limited; courts should not interfere unless there is clear evidence of perversity or violation of public policy.
Limited intervention of the Courts in arbitral proceedings is intended by the legislature. An Arbitral Award may only be set aside if it is patently illegal, against the public policy of India, based....
Limited grounds for setting aside an arbitral award under Section 34 of the Arbitration Act and the Court's reluctance to re-adjudicate disputes on their merits.
The court affirmed that arbitral awards challenging under Sections 34 and 37 are limited in scope, requiring clear evidence of illegality or perversion; otherwise, the Arbitrator's decision stands.
The limited grounds for interference with an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, emphasize the concept of patent illegality and the criteria for setting asi....
The Court held that the Arbitral Award does not suffer from any infirmities enshrined in Section 34 of the Act. The Impugned is not in conflict with the public policy of India. Further, the learned T....
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