Award Cannot Be Set Aside U/S 34 Of Arbitration Act If View Taken By Arbitrator Is A Plausible View: Delhi High Court

Brief Facts

The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter 'the A&C Act') assails an arbitral award dated 12.04.2022, whereby the arbitral tribunal has refused to grant specific performance of an agreement to sell dated 30.12.2009 (hereafter the agreement) and directed the respondent to make a payment of Rs. 10,37,63,684/- to the petitioner within four weeks from the date of the award while rejecting all other claims and counterclaims raised by the parties.

The respondent became the owner of property pursuant to a sale deed dated 29.11.2006. Subsequently, the respondent entered into an agreement to sell dated 30.12.2009 (hereinafter “the agreement”) in respect of the concerned property with the petitioner. This agreement lies at the centre of the controversy in the present case.

While the respondent admittedly received the sale consideration of Rs. 5 crores, as specified under the agreement, it failed to comply with the obligation under the agreement to either repay an amount of Rs. 5,52,50,000/- in lieu of the sale consideration within 72 days of signing the agreement or execute a sale deed within 75 days of signing the agreement. Subsequently, the petitioner initiated arbitration to resolve the dispute/s.

The arbitral award dated 12.04.2022 (hereinafter “the impugned award”) rejects the claim of the petitioner for specific performance and instead directs the respondent to refund the sale consideration to the petitioner along with interest. Hence, the present petition.

Contentions

The petitioner submitted that it was emphasised before the learned Arbitrator that once 100% payment has been made, there is no discretion available to the learned Arbitrator as far as the grant of specific performance is concerned, as held by the Supreme Court in the case of Leeladhar (Dead) Through Legal Representatives v. Vijay Kumar (Dead) Through Legal Representatives and Others, (2020).

That the passage of time does not afford an adequate justification to deny specific relief in a situation where 100% payment has already been made by the vendor, as held by the Supreme Court in Ferrodous Estates (Pvt.) Ltd. v. P. Gopirathnam (Dead) and Others, 2020.

That Clause 2 and Clause 11 provided that the option to the vendor to refund the amount was available only for a period of 72 days from the date of signing of the Agreement and after that, the vendor did not have this option of seeking to resist specific performance of the Agreement and refunding the sale consideration amount.

Per contra, the respondents submitted that the Arbitral Tribunal rightly exercised its discretion in not granting specific performance.

That the attendant circumstances surrounding the Agreement to Sell coupled with the fact that the persons who have allegedly paid 100% consideration chose to sit silent for inordinately long period of time, gives an insight as to the real nature of the transaction.

Court's Analysis

The court, at the outset, discussed the nature of relief under the Specific Relief Act and observed that While the remedy of specific performance is available under the Specific Relief Act, 1963, it is a settled position in law that granting such a relief of specific performance lies entirely in the discretion of the Court. Section 20 of the Specific Relief Act, 1963 (prior to the 2018 amendment) stipulates that the court is not bound to grant the relief of specific performance merely because it is lawful to do so but in terms of discretion guided by soundness, reasonability and judicial principles.

The court further observed that Specific relief is a discretionary remedy. Since the agreement to sell is dated 30.12.2009, the subsequent amendment to the specific relief act, whereby Section 10 of the amended Act makes it mandatory to grant specific relief, would not be applicable in the present case since the same only has prospective application.The Supreme Court in Katta Sujatha Reddy and Another v. Siddamsetty Infra Projects Private Limited and Others (2023) has affirmed this position.

The court further referred to the Supreme Court judgment in Rajesh Kumar v. Anand Kumar and Others 2024 wherein it was held that where the suit for specific performance was instituted at the fag end of the period of limitation, the same would be an inhibiting factor in grant of specific performance.

The court while applying the above ration to the facts of the present case observed that sespite period 72 days having elapsed, there was no correspondence from the Claimant regarding the same, pertaining to further course of action. Furthermore, the Claimant was unable to demonstrate any correspondence with the Respondent, wherein it had asked the latter to execute the sale deed, upon such period of 72 days having elapsed.

The court agreed with the findings of the Arbitrator and observed that the impugned award rightly took note of the implication flowing from the conduct of the parties as noticed therefore the Arbitrator was right in in reaching the conclusion that specific performance is not warranted in the facts and circumstances of the case.

The court further noted the conduct of the petitioner. The petitioner took a stand under section 9 petition filed by him that the physical possession of the property was delivered to him on the date of the agreement itself whereas in the proceedings before the Arbitrator, he pleaded that he should be awarded compensation at a particular rate of interest for the delay in handing over the possession.

Having noted the above facts and circumstances, the court observed that It is thus evident from the same that there is an ambiguity/ ambivalence in the stand of the petitioner as regards possession of the property.

The court referred to the Supreme Court judgment in P. Sudhakar Reddy v. M. Chalapathi Reddy 2006 wherein it was held that where the pleadings are not specific, clear but they are ambiguous, the party in the absence of the clear pleadings would not be entitled for the discretionary relief of specific performance.

The court further observed that the conduct of the parties has a bearing on the issue of 'willingness' of a party to adhere to the terms of the agreement to sell. Also, any ambiguity in the stand of the parties is a factor that can legitimately weigh with a Court or the Tribunal in refusing to grant specific performance.

The court came to the conclusion that the award renders a categorical finding that grant of specific performance would be inequitable in the facts and circumstances of the present case, and and would unfairly benefit the claimant.

The court further reiterated the settled position and observed that the award has to be examined through the prism of Section 34 of the A&C Act, and it is too well settled to need any iteration that the view taken by an arbitral tribunal would pass muster as long as it is a possible view to take. View Taken by the Arbitral Tribunal is an eminently possible view.

The court concluded that from an overall consideration of the matter and particularly taking into account the aspects enumerated above, it cannot be said that the view taken by the learned Arbitrator is an impossible view to take, which, as noticed, is the settled yardstick for determining whether an arbitral award is liable to be set aside.Accordingly, the present petition was dismissed.

Case Title: RUDRA BUILDWELL PVT LTD. v. REALWORTH INDIA PVT LTD

Case Reference: O.M.P. 6/2022 &I.A. 11979/2022

Judgment Date: 29/10/2024

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