The modification of an arbitral award by the court violates the limited grounds set under Section 34 of the Arbitration and Conciliation Act, necessitating evidence for damages claimed.

JUDGMENT

VIBHU BAKHRU, J

1. The present cross appeals have been filed under Section 37(1)(c) of the Arbitration & Conciliation Act, 1996 (hereafter ‘the A&C Act’) impugning an order dated 15.04.2019 (hereafter ‘the impugned order’) passed by the learned Single Judge of this Court in OMP No.1125/2014 captioned Vinod Seth (deceased) through Kunal Seth & Anr. v. Sudershan Kumar Bhayana & Anr. The legal heirs of Sh. Vinod Seth [appellants in FAO(OS) No.204 of 2019 / respondents in FAO(OS) No.132 of 2019] had filed the aforesaid application under Section 34 of the A&C Act impugning an arbitral award dated 21.10.2013 (hereafter ‘the impugned award’) delivered by an Arbitral Tribunal comprising of a sole arbitrator. They took exception to the impugned award to the limited extent that the claims made by the respondents (their predecessor) were allowed, and to the extent that the counterclaims were not awarded in full.

Factual Context

2. The impugned award was rendered in the context of the disputes that had arisen in connection with the agreement dated 09.04.2010 (hereafter ‘the Collaboration Agreement’) in respect of a property described as “three storied Built-up Property Bearing No. 40, in Block F-1U, Built on Land Measuring 242 Sq. Yds., Situated at Pitampura, Delhi, with the freehold rights of the land under the said property, with all facilities & easement therein” (hereafter ‘the subject property’) The Collaboration Agreement was entered into between Sh. Sudershan Kumar Bhayana and his wife Smt. Kiran Bhayana (hereafter ‘the Owners’) on one part, and Sh. Vinod Seth (hereafter ‘the builder’) on the second part.

3. In terms of the Collaboration Agreement, the builder had agreed to construct “1/3rd parking + 2/3 basement with guiniting work (water proofing), Upper ground floor, first floor, second floor and third floor with all fittings fixtures and finishing work as per A class construction.” after demolishing the extant building on the subject property. In addition, the builder also agreed to pay a sum of ₹64,00,000/- and bear the cost of construction. In consideration for the same, the Owners had agreed that the builder would retain the second floor without roof rights, in the building as reconstructed, and they would execute a registered sale deed in respect of the said floor, in his favour.

4. The builder was required to construct the building within a period of twelve months or earlier with a further grace period of two months. However, if there was any delay thereafter, the builder would be liable to pay a penalty of ₹10,000/- per day, for the delay in completing the construction.

5. The building plans were sanctioned on 31.12.2010 and the Owners also granted an extension of time to complete the construction. The disputes between the parties arose sometime in August, 2011 and the Owners terminated the Collaboration Agreement on 11.11.2011. Subsequently, by a letter dated 13.01.2012, the Owners forfeited the money deposited by the builder and also called upon him to pay a further sum of ₹55,00,000/-.

Arbitral Proceedings

6. In the aforesaid context, the builder filed a petition under Section 9 of the A&C Act, inter alia, seeking an order restraining the Owners from alienating, disposing of, dealing with or creating any third party right in respect of the second floor of the subject property. In the said proceedings, the parties agreed that they be referred to arbitration. With the consent of the parties, the learned Arbitrator was appointed. The court also directed that the arbitration be conducted under the aegis of the Delhi International Arbitration Centre (then known as Delhi High Court Arbitration Centre) and in accordance with its Rules.

7. Before the Arbitral Tribunal, the Owners were a