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IN THE HIGH COURT OF JUDICATURE AT MADRAS
PARESH UPADHYAY, D. BHARATHA CHAKRAVARTHY, JJ.
M/S. Macro Marvel Projects Ltd. Rep. by its Executive Director, Ragu Kumar - Appellant
Versus
J. Vengatesh & Others - Respondent
O.S.A.No. 341 of 2019
Decided On : 28-09-2022
Arbitration & Conciliation Act - Specific Performance - Section 34
Fact of the Case:
The appellant and the respondents entered into an agreement of sale for a property. Dispute arose when the respondents cancelled the Power of Attorney and refused to execute further sale deeds. The appellant invoked arbitration and sought specific performance, damages, and mandatory injunction. The Arbitral Tribunal allowed the claim and directed the respondents to execute the sale deeds. The respondents filed a Section 34 petition to set aside the award, arguing that the agreement was inequitable and not capable of enforcement.
Finding of the Court:
The learned Judge found that the agreement was not specifically enforceable as it gave undue advantage to the appellant and violated public policy. The learned Judge ordered the respondents to pay a sum of Rs.50,00,000 to the appellant in lieu of specific performance.
Issues: The issues included the validity of the termination of the agreement, breach of contract, entitlement to specific performance, damages, and counterclaim, breach of trust in obtaining a loan, and vitiation of the agreements due to breach of trust.
Ratio Decidendi: The Court held that the agreement was not specifically enforceable as it gave undue advantage to the appellant and violated public policy. The Court also found that the arbitral award could not be modified or varied, and the nature of the agreement was a matter of construction and not a ground for setting aside the award.
Final Decision: The Original Side Appeal was allowed, and the order of the learned Single Judge was set aside. Consequently, the Section 34 petition was dismissed, and there was no order as to costs.
JUDGMENT
(Prayer: Original Side Appeal filed under 37(2) of the Arbitration & Conciliation Act, 1996 r/w Clause 15 of the Letters Patent to set aside the judgment and decree of the learned Judge of the Original Side of this Court passed in O.P.No.235 of 2008, dated 19.08.2019 and allow the above appeal.)
D. Bharatha Chakravarthy, J.
A. The Appeal:
1. This intra-Court appeal is filed against the order of the learned Judge, dated 19.08.2019, whereby, the learned Judge allowed the Original Petition filed by the respondents 1 to 3 under Section 34 of the Arbitration and Conciliation Act, 1996 and set aside the award, dated 21.01.2008 passed by the Arbitral Tribunal in favour of the appellant, which was in the nature of specific performance of the contract being the sale of plots and instead, awarded a sum of Rs.50,00,000/- to the appellant.
B. The Facts in brief:
2. The brief facts leading to the filing of this appeal are as follows:- The appellant and the respondents 1 to 3 entered into an agreement of sale, dated 17.02.2004. As per the same, the respondents are the owners of the property mentioned in the schedule to the agreement totally admeasuring 8.21 acres in Manapakkam village, Sriperumbudur Taluk, Kancheepuram District. By the said agreement, they agreed to sell the same to the appellant or its nominees and the appellant will promote the project of independent residential houses. The sale consideration payable by the appellant/developer will be Rs.3,85,000/- per C.M.D.A approved ground of 2400 Sq.ft. The appellant/developer had also undertaken to pay a sum of Rs.1,00,00,000/- as advance to be adjusted in the sale consideration, which included a sum of Rs.35,00,000/- already paid by the appellant and the balance of Rs.65,00,000/- have to paid after the appellant/developer avails project finance from its bankers by mortgaging the schedule property. The appellant was also authorised to obtain building license and do all things necessary for the development of the project. The appellant/developer was also free to enter into the sale agreement for sale of the plots except a few plots which were specifically retained by the vendor. As per the agreement, any dispute arising out of the same shall be referred to arbitration and it is useful to extract clause No.17 which reads as follows:-
"17. Any dispute between the parties to this agreement in regard to the interpretation of this agreement and of any matter arising out of this agreement shall be referred to arbitration under the provisions of the Arbitration Act to abitrators - one nominated by each party. Any award given in any such arbitration proceedings shall be final and binding on the parties to this agreement. The venue of the arbitration proceedings shall be the City of Chennai only."
Thereafter, a supplementary agreement was also entered into between the parties on 12.05.2004, whereby, the sale consideration was increased from Rs.3.85 lakhs per plot to Rs.4.12 lakhs per plot. Pursuant to the agreement, development charges were paid to the Chennai Metropolitan Development Authority on 04.05.2005. Thereafter, on 26.09.2005, the respondents herein cancelled the Power of Attorney in favour of one M.Arumugam who was only dealing on their behalf with the appellant/developer. The said Arumugam is the father-in-law of the first respondent, husband of the second respondent and father of the third respondent. It seems as if there was inter se dispute arose between the respondents and said Arumugam, being the family members, leading to filing of the suit in O.S.No.911 of 2005 and ultimately on 24.11.2005, the said suit was dismissed as settled out of Court and on 07.04.2006, again, a fresh Power of Attorney was executed by the respondents in favour of the said Arumugam. On 12.04.2006, the said Arumugam executed gift deeds of the road and common areas in favour of Kundrathur panchayat union and on 05.05.2006, the C.M.D.A approved the lay out, in and by which, the 8.2
AI
An arbitral award that contravenes the terms of the underlying agreement is patently illegal and can be set aside by the court, regardless of prior pleadings on jurisdiction.
The court upheld the arbitral award, affirming that specific performance can be granted based on a composite understanding derived from multiple correspondence and agreements, emphasizing the need fo....
The court reiterated that a party's failure to perform contractual obligations negates the other's right to enforce the contract, emphasizing limited interference in arbitral awards.
The court upheld the arbitral award, finding no unreasonable delay or jurisdictional errors, affirming the arbitrator's findings were based on evidence, as claims were not barred by limitation.
The arbitrator's decision is final, and interference by the Court is limited. The Court cannot re-assess evidence or substitute its own evaluation of the conclusion of law or fact.
The jurisdiction of the Appellate Court dealing with an appeal under Section 37 against the judgment in a petition under Section 34 is more constrained than the jurisdiction of the Court dealing with....
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