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.

ORAL JUDGMENT

(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)

1. The appellant [NDPL] has filed the present appeal under Section 37 (1)(c) of the Arbitration and Conciliation Act, 1996 [AC Act], impugning an order dated 15.07.2024 [impugned order passed by the Court of LXXXVII Additional City Civil and Sessions Judge, Bengaluru [Commercial Court] in Com. A.P No.99/2022.

2. The respondent had filed the said application under Section 34 of the A&C Act seeking setting aside of the arbitral award dated 27.06.2022 passed in A.C No.285/2021 [impugned award rendered by an arbitral tribunal comprising a sole arbitrator [Arbitral Tribunal] appointed by this Court by an order dated 08.10.2020 passed in CMP No.132/2018.

3. The impugned award was rendered in the context of the disputes that had arisen between the parties in connection with a Memorandum of Understanding dated 02.05.2017 [the Agreement].

4. The respondent had filed its statement of claim, inter alia, praying as under:

"Pass an Award directing the Respondent to Assign the Development Rights of the Suit Schedule Properties to the Petitioner in terms of the Memorandum of Understanding and Assignment agreement dated 02.05.2017."

5. As is evident from the above, the respondent claimed an award for specific performance of the Agreement. The Arbitral Tribunal dismissed this claim. However, it awarded an amount of `9,30,00,000/- (Rupees nine crore thirty lakh only) along with interest at the rate of 6% per annum from 07.11.2017 until the date of payment, in favour of the respondent. The Arbitral Tribunal was of the view that although the claim for specific performance of the Agreement could not be granted, the respondent was entitled to a refund of the amount paid as part of the consideration due under the Agreement.

6. NDPL accepted the impugned award and did not prefer an application under Section 34 of the A&C Act to set it aside.

PREFATORY FACTS

7. NDPL is a company incorporated under the Companies Act, 1956 and is engaged in the business of developing real estate. NDPL had acquired development rights to construct a multi-storied apartment complex in respect of the subject land which is described below:

8. The respective owners of the parcels of land comprising the subject land had executed joint development agreements with NDPL for the development of an apartment complex [Project] on the subject land.

9. Apparently, NDPL found it difficult to execute the development works due to paucity of financial resources and therefore, entered into a Memorandum of Understanding dated 02.09.2014 [the MoU] with another company engaged in real estate development, M/s. G-Corp Developers Private Limited [G- Corp], for the development of the Project. According to NDPL, it entered into a settlement whereby G-Corp agreed to cancel the MoU for a consideration of `11,00,00,000/- (Rupees eleven crores only).

10. In the above background, the parties entered into the Agreement under which NDPL agreed to assign its development rights in respect of the subject land to the respondent. NDPL also represented that the MoU with G-Corp had not been acted upon and was mutually cancelled. NDPL had agreed to pay an amount of `11,00,00,000/- (Rupees eleven crores only) to G-Corp.

11. In terms of the Agreement, the respondent agreed to pay a sum of `47,00,00,000/- (Rupees forty seven crores only) as consideration for NDPL assigning the development rights.

12. The respondent paid a sum of `9,30,00,000/- (Rupees nine crore and thirty lakh only) and did not pay the balance amount. Resultantly, NDPL sent a notice dated 07.08.2017 calling upon the respondent to pay the balance amount of `37,70,00,000/- (Rupees thirty seven crore and sev