IMPORTANT POINT
There is distinction between deposit paid and money tendered in part payment of amount payable under agreement to sell.

Pradeep Nandrajog, J.—On October 4, 2005 a development agreement was executed in writing. Uma Kapoor and her son Vivek Kapoor were referred to therein as the first party and Kapil Aggarwal was referred to therein as the second party. As per the agreement, the first party was the owner of property bearing No.18, Road No.78, Punjabi Bagh, ad-measuring 550 sq.yds. As per the agreement, the second party had to demolish the existing building and reconstruct the same using his own funds. He had to pay Rs.2,10,00,000 (Rupees Two Crores Ten Lacs only) to the first party. After reconstruction, the ground floor was to belong to the first party. The first and the second floor with roof rights above were to belong to the second party. To facilitate the redevelopment the first party was to vacate the property within three months. The property had to be reconstructed by February 2007 or within sixteen months from the date when second party took over possession from the first party. A penalty of Rs.25,000 (Rupees Twenty Five Thousand only) per month for delayed construction was stipulated in the agreement.

2. The agreement records that the second party has paid Rs.25,00,000 (Rupees Twenty Five Lacs only) to the first party. It records that the balance sum ofRs.1,85,00,000 (Rupees One Crore Eighty Five Lacs only) shall be paid by the second party to the first party within three months from the date of execution of the agreement or when the sale-deed was executed by the first party in favour of the second party with respect to the first and the second floor, whichever was earlier. Parties are not at variance that the second party paid a further sum of Rs.75,00,000 (Rupees Seventy Five Lacs only) to the first party in different instalments, the last of which was in sum of Rs.20,00,000 (Rupees Twenty Lacs only) on February 22, 2006.

3. The redevelopment was a non-starter. The reason was that the plot of land was a part of a larger plot ad-measuring 2609 sq.yds and in a partition as per a compromise decree passed by this Court in a suit the 550 sq.yds land came to the share of the first party. Before reconstructing sanctions had to be obtained from the municipal authorities which require an existing unauthorized construction to be regularized before plans were sanctioned for reconstruction of the property and thereafter the existing structure was to be demolished. The unauthorized constructions in the building could be regularized only by May 17, 2007, by which date, the stipulated date of completion had become history. It was only thereafter the second party requested the first party to hand over possession of the existing building so that after demolishing the same he could reconstruct on the plot. The first party refused.

4. The agreement between the parties had an arbitration clause. The dispute was referred to the sole arbitration of Justice R.C. Chopra (Retd.). The second party: Kapil Aggarwal was the claimant. He sought specific performance of the agreement to sell. The first party opposed the grant of specific performance of the agreement and raised a counter claim in sum of Rs.20,00,000 (Rupees Twenty Lacs only).

5. Interpreting the agreement Ex.C-1 the learned Arbitrator took the view that under the agreement the first party was not obliged to regularize the existing unauthorized construction and obtain a completion certificate before the property had to be redeveloped. The learned Arbitrator noted that the second party was a builder and therefrom attributed knowledge to the second party of being aware of what documents were required before municipal sanction could be obtained to reconstruct the property. The learned Arbitrator noted that the second party had been silent with respect to steps taken to obtain a municipal sanction to reconstruct the property. In that view of the matter the learned Arbitrator has held that the second party would not be entitled to specific performance of the agreement Ex. Cl.

6. Holding so, the le