JUDGEMENT:

Context and Factual Background:

1. This is a Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) challenging an arbitral award dated December 21, 2020 (“Impugned Award”) in connection with disputes and differences between the parties under a Development Agreement dated October 20, 2010 (“Development Agreement”).

2. The Petitioners No. 1 to 3 are partners of Petitioner No. 4, Lukhi Associates (collectively, “Developer”), which undertook the development work under the Development Agreement. The Respondents are Mr. Rajendra Tormal Saini, Mr. Ashok Tormal Saini, Mr. Basant Tormal Saini, who are all legal heirs of Late Mr. Tormal Dedraj Saini (collectively, “Tormal”) and Mr. Mahesh Dadraj Saini (“Mahesh”). One Kailash Dedraj Saini (“Kailash”), a sibling of Tormal and Mahesh too owned the land in question but he assigned all his right and interest in the property to the Developer for a consideration of Rs. 1.90 crores and is not party to the dispute.

3. Disputes and differences between the Developer and the Landowners led to the proceedings and eventually to the Impugned Award. The core dispute was about the claim of the Landowners that they were given possession of flats that were not in conformity with their entitlements under the Development Agreement, and the claim of the Developer that the difference in the area of the land covered by the Development Agreement led to a lesser development potential, which entitled the Developer to proportionately reduce the entitlement of the Landowners.

4. Under Clause 5 of the Development Agreement, Tormal was entitled to four flats aggregating to 2,500 square feet of “built up area wall to wall” while Mahesh was entitled to three flats aggregating to 2,270 square feet of “built up area wall to wall”. One Deepak Chirangilal Saini (“Deepak”) was entitled to one flat of 230 square feet. In all, the entitlements towards such flats aggregated to 5,000 square feet.

5. However, Deepak reached a settlement with the Developer and his entitlements were not part of disputes dealt with in the arbitration. For purposes of this judgement, for convenience, Mahesh and Tormal are referred to as “Landowners”. Although entitlements of Kailash and of Deepak, as applicable, would be subsumed in entitlements and obligations of all the owners of the land, all references to such entitlements and obligations of Landowners in this judgement shall mean the proportionate entitlements and obligations of Tormal and Mahesh.

6. The Developer was free to purchase transferable development rights (“TDR”) and load it on to the project to exploit it. However, any enhanced development potential that became available on the land was to be equally shared in proportion to the share of the property among the parties – the Landowners too made a claim for

two-thirds share of an alleged increase in floor space index (“FSI”) that they claimed became available on the land.

7. Outgoings including property taxes were to the account of the Landowners until completion of the development, and thereafter to the account of the Developer. The building was to be constructed within 24 months. The Landowners were to be paid Rs. 8.4 lakh rent for the first 12 months and Rs. 9.24 lakhs for the next 12 months. If the development were still not completed with the possession of the flats due to the Landowners aggregating to 5,000 square feet being handed over within deadline, there would be a 10% escalation in the rent every year or after 36 months, the Developer would need to pay Rs. 1 crore for every year’s delay.

8. The Developer was to conduct a survey, prepare plans and develop the property. The Schedule describing the property in the Development Agreement recorded that the land involved admeasured 1,053 square yards equivalent to 880.31 square metres”. The Schedule explicitly recorded that while the actual measurement was 880.31 square metres, the area shown in the property card was 819.30 square metres.

9. It