Aawas Builders vs Ajit Pathare

Anoop V. Mohta, J.—Heard finally, by consent of the parties.

Both the Petitioners have challenged Arbitral Award dated 31 October 2011, passed by the sole Arbitral Tribunal, referring to their respective challenges and grounds so raised in the separate Petition filed by the Builder and the Owners of the property in question.

The basic facts are as under:-

Late Ramnath Hiraji Pathare, the late father of the Respondents-Original Claimants was one of the six co-owner of a piece of land bearing CS No. 357, admeasuring 178.09 sq. meters situated at 40/E, Parel Village, Parel, Mumbai-400 012 (the Plot) together with a ground plus one floor structure bearing House No. 40(E) standing thereon, which was occupied by them and was in a dilapidated condition and needed urgent repairs at the material time. In April 2001, as Mrs. Shraddha Ajit Pathare, the wife of Respondent No. 1 in Arbitration Petition No. 163 of 2012 (Original Claimant No. 1) was acquainted with Petitioner No. 2 in Arbitration Petition No. 163 of 2012 (Original Respondent No. 2) and was aware that he was in the field of building construction, requested him to take up the work of carrying out urgent repairs to their old structure on urgent basis. Original Respondent No. 2, after inspecting the site informed the late father of the Original Claimants that tentative repairs to the said structure was not feasible and that plan for constructing new building after demolishing the old dilapidated building would have to be submitted by the owners of the plot.

On 4 July 2002, the late father of the Original-Claimants issued Notice under Section 342 of BMC Act for appointing Architect Shri Sachin Waikar for constructing building on the property/plot. On 1 August 2002, the late father, as co-owner of the said property got prepared building plan through his Architect and submitted the same to the MCGM for approval. According to the Plan, a new building consisting of seven flats i.e. three flats of 400 sq. ft (carpet area) each and four flats of 200 sq.ft. (carpet area) each was to be constructed on the property. According to the late father of the Original-Claimants, two flats admeasuring 400 sq. ft. (carpet) each, were to be retained by him, one flat admeasuring 400 sq. ft. (carpet) was to be retained by Pushpalata, daughter of Narhari Pathare, and balance 4 flats of 200 sq. ft. (carpet) each was to be given to the other co-owners.

Based on the area calculations as shown in the proposed building plan submitted by late father to the MCGM, Original-Respondent No. 2-Builder prepared a Development Agreement setting out the area of the flats to be constructed and general terms and conditions of development of plot and gave the same to the late father and another co-owners for their approval.

As the other four co-owners insisted on getting one flat of 225 sq.ft. carpet area each as against flat admeasuring 200 sq. ft. carpet available to each of them in the plan submitted, was required to be corrected.

On 9 July 2003, the plan was duly corrected whereby, four flats of 380 sq.ft. (carpet) with enclosed balcony and four flats of 225 sq. ft. (carpet). The corrected plan was duly sanctioned by the MCGM on 9 July 2003 and IOD of even date was also issued by the MCGM for the building in the name of late father of the Claimants. However, no fresh Agreement with the late father was entered into after 9 July 2003 as Original-Respondent No. 2 was only required to construct the building as per the sanctioned plan dated 9 July 2003 and other clauses of Agreement dated 22 October 2001 were to remain the same. In December 2004, the Original-Claimants gave vacant possession of the property after which Respondent No. 2 started and completed the work of demolishing the old structure.

On 14 March 2005, the Commencement Certificate was issued by the MCGM. In the month of February 2006, building completed in all respect and old water connection was retained pending grant of Occupation certificate by the MCGM to the building. On 30 March 2006, Original-Claimant Nos. 1 and 3 on the mid-night of 30 March 2006 took forcible possession of two flats i.e. flat No. 1 and 3 on 1st and 2nd floor in the new building around 1.00 a.m. after breaking the locks put by Original-Respondent No. 2 to their flats and dump their own articles inside the two flats after locking the workers sleeping in the without making the balance payment of Rs. 1,95,000/- due from them to the Petitioners-Original Respondents towards construction cost of their two flats. On 30 March 2006, Original-Respondent No. 2 filed a police complaint with Bhoiwada Police Station against the Original-Claimants for housebreaking and trespass and the Original-Claimants were called at the police station. On intervention by local Sena Vibhag Pramukh, the Original-Claimants pleaded for settlement and agreed to pay Rs. 1,50,000/-to Petitioner-Original Respondent No. 2 in three installments by issuing three post dated cheques dated 5 April 2006, 5 May 2006 and 5 June 2006 each of Rs. 50,000/-, drawn on Abhyudaya Co-op. Bank Ltd. Original- Respondent No. 2 accepted the cheques. However, only 1st Cheque dated 5 April 2006 was honoured.

On 2 May 2006, a letter addressed by the Advocate on behalf of late father and other Original-Claimants to Petitioner-original Respondent No. 2 demanding Rs. 1,60,000/-towards cost of alleged shortage of 40 sq. ft. carpet area in flat No. 1 and 3; Rs. 1,48,000/-towards alleged accommodation expenses incurred by the Original-Claimants between 1 July 2003 till March 2006; Rs. 50,000/- being the amount of cheque dated 5 April 2006 allegedly encashed by Original-Respondents without doing any work; Rs. 50,000/-towards alleged hardships and victimization.

On 5 May 2006, Original Claimant No. 1, honoured the first cheque dated 5 April 2006 for Rs. 50,000/-but stopped payment of second cheque dated 5 May 2006 by falsely alleging that the Petitioners-Original Respondents were not entitled to the amount as they had not completed the work as per the agreement. Hence Original-Respondent No. 1 initiated proceedings under Section 138 of Code of Criminal Procedure against the Respondent No. 1 before the Metropolitan Magistrate, Mazgaon being case No. 589/SS of 2006 and the same is pending. On 17 May 2006, Respondents herein replied to Notice dated 2 May 2006 through their Advocate and denied the alleged claim of the Original-Claimants. On 18 May 2006, the Petitioners-Original Respondents through their advocate served notice under Section 138 of Negotiable Instruments Act for dishonour of cheque dated 5 May 2006 for Rs. 50,000/-by the Original-Claimants. On 7 June 2006, Original-Claimant No. 1 replied to the advocates Notice dated 18 May 2006 through his advocate. On 21 September 2006, Arbitration Application No. 183 of 2006 was filed by Ramnath Hiraji Pathare in this Court. On 21 January 2007, the Executive Engineer, Building Proposal, MCGM in the presence of the father of the Original-Claimants inspected the entire new building and its construction. Both, Claimants father and the officer of the MCGM were satisfied that the entire building was constructed as per the sanctioned plan. On 4 May 2007, the building constructed by the Petitioners-Original Respondents was completed and Completion Certificate in respect of the building was issued by MCGM by their letter addressed to the Architect for the Original-Claimants. The other co-owners were put in possession of their respective flats after they made payments to the Petitioners-Original Respondent No. 1 on the basis of the area allotted to them i.e. 225 sq. ft. (carpet) calculated at the rate of Rs. 1250/-per sq.ft.

On 5 February 2009, Ajeet Ramnath Pathare filed Arbitration Petition (Lodging) No. 104 of 2009 wherein, by order dated 27 February 2009 was appointed to act as a Sole Arbitrator. On 2 March 2010, the Respondents-Original Claimants filed a claim of Rs.1,14,50,104/-before the Sole Arbitrator under various heads along with interest, the main contention being that there was deficiency in the area of flat Nos. 1 and 3 constructed by the Petitioners-Original Respondents, to the tune of 119.16 sq. ft. In June 2010, the Petitioners-Original Respondents filed their Statement of defence along with annexures. The Petitioners-Original Respondents contended that (i) they had carried out the construction as per the building plans submitted by the father of the Original-Claimants; (ii) the MCGM had issued building completion certificate on 4 May 2007 after physically verifying the area of each flat on 16 January 2007 and; (iii) the MCGM had issued building occupation certificate only after verifying and being satisfied that the area of the flats and the amenities provided were as per the sanctioned plans; (iv) that although the Development Agreement dated 22 October 2002 mentioned that the Claimants were entitled to two flats admeasuring 400 sq. ft. (carpet) each, the area was reduced from 400 sq. ft. to 380 sq. ft. to accommodate the revised area of the remaining four flats from 200 sq. ft. to 225 sq. ft. (carpet) and that the Petitioners-Original Respondents had carried out the construction as per the plan got sanctioned by the Claimants'' father from MCGM on 9 July 2003. The parties filed a compilation of documents in support of their case and oral evidence was led. The parties had also filed their respective written arguments.

On 31 October 2011, the sole Arbitrator upon considering the pleadings and oral evidence led by the parties rejected all the claims of the Original-Claimants, save and except the claim of deficit of 40 sq. ft..

On 29 November 2011, the Petitioners-Original Respondents have filed Arbitration Petition No. 163 of 2012 challenging impugned Award dated 31 October 2011 only to the extent that the Award held the Petitioners-Original Respondents liable to pay to the Original-Claimants Rs. 1,60,000/-being deficiency area of 40 sq. ft. calculated at the rate of Rs. 4,000/-per sq. ft..

There is no dispute that there was an agreement to develop/built the property, based upon the sanctioned plan, signed by the owner-late father, and the architect, the building in question has been constructed. There is nothing on record to show any objection with regard to the sanctioned area. The submission that the first notice of objection about the area was issued by the late father, that itself is not sufficient to accept the contention/submission raised by the other owners with regard to the signatures of the late father and the sanctioned plan in question. There is nothing on record to show that the other legal heirs have any personal knowledge with regard to the basic agreement, and the subsequent understanding and the reasons for signing the sanctioned plan by the late father, at the relevant time. During the life time of the late father the construction was completed. He expired on 19 December 2008.

The issue even if raised by the legal heirs, in view of the agreement clause No. 21 of Arbitration still above undisputed position, till the stage of construction of the premises and actual possession of the same even by the late father and others, in my view, just cannot be overlooked.

The question and submission that the development agreement should prevail for all the purposes in such matters and in such circumstances, is also not acceptable. The parties subsequently permitted to change their own clauses about the area for the construction and submitted the plan as per the required law, which needed them to change the clauses with regard to 20 sq. ft. area, as referred in paragraph Nos. 34 to 36 of the award, in my view, was necessary. The parties can change and/or alter their written documents, agreement by subsequent signatures, writings and apart from that the conduct and by the valid sanction whereby, both the parties have acted. The other relevant certificates including commencement certificate and occupation certificate further destroyed the submission of the co-owner that the basic agreement should prevail over the actual construction, is also unacceptable. This is not the case where the developer constructed the premises based upon the sanctioned plan submitted by his architect without permission and/or knowledge of the owners for reduced area, including of balcony.

The learned Arbitral Tribunal based upon the material placed on record has come to the conclusion and passed the award therefore, no case is made out to interfere with the same except the issues of area so discussed, distinguished, which in my view, can dissected from the rest of award. I am inclined to interfere with the dissectable part as dealt in paragraph Nos. 36 and 37 with regard to the grant of compensation referring to 40 sq. ft. area. As there is nothing in the facts and circumstances itself to grant such compensation on a foundation of "to err and/or safer side"-the clauses of sanctioned plans were clear and so also the conduct. This, in my view, is sufficient to hold that both the parties have acted upon the subsequent events by jointly consenting in writing to develop the property as per the requirement of law read with the object to give equal and required minimum carpet area. No other co-owner has objected the same at the relevant time and even by the late father. The subsequent objection, even if any, which remained to be proved, cannot be the basis to grant such compensation and/or costs. Mere raising objection with regard to the signature of the late father, itself is not sufficient and need not be gone into. The construction commenced and completed on the basis of legally sanctioned plan -other certificates obtained and granted by the Authorities. The owners occupied the newly constructed premises accordingly. Therefore, no case is made out to grant such claims.

So far as the owners'' claims are concerned, the learned Arbitral Tribunal by giving sufficient reason denied/rejected the claim No. 1. So far as claim No. 2-Temporary Accommodation Expenses is concerned and Claim No. 3 of Litigation Expenses and Compensation for hardships, Victimization and mental torture so also the order of no costs, in the circumstances, all these claims have been rightly rejected and even otherwise there is no perversity which requires to be dealt with in Section 34 Petition, as there is no contra material to interfere with the findings so given, except grant of the compensation as dealt with in the above para. The award as dissectable is modified only to the above extent. The rest of the award is maintained.

There is no bar to dissect the severable part and to modify the award. The Supreme Court recently in Oil and Natural Gas Corporation Ltd. Vs. Western Geco international Ltd., observed that-

"40 It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a definition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an Arbitral Tribunal that enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast away or modified depending upon whether the offending part is or is not severable from the rest."

In Axios Navigation Co. Ltd. Vs. Indian Oil Corporation Limited, Refineries Division, I have already taken a similar view in paragraph 60, which reads thus:-

"60 I have already observed in Anupam Engineer, Mumbai Vs. Indian Oil Corporation Ltd., Mumbai 2010 (2) Mh.L.J. 632 that Arbitral Award can be modified by the Court under Section 34 of the Arbitration Act by referring the various Supreme Court Judgments, and further in Union of India (UOI) and Dy. Chief Engineer (Const.) Vs. Sagar Thermit Corp. Ltd., by referring to R.S. Jiwani (Supra). Therefore, if the Court has power to modify the award, then there is no reason not to modify the majority award in part. It is also made clear that if there is a question of reappreciation of documents and material on record, then it will be difficult for the Court under Section 34 to grant the award for the first time by reappreciating the material on record, but if there is a question of law involved and/or only question of interpretation or clause and/or related aspects, whether appreciation of evidence is not necessary, the Court may pass and/or modify the award accordingly."

Therefore, taking overall view of the matter, I am inclined to pass the following order:-

ORDER

a) Arbitration Petition No. 163 of 2012 filed by the Builder, is partly allowed.

b) Arbitration Petition No. 192 of 2012 filed by the owners is dismissed.

c) Arbitral Award dated 31 October 2011 is modified to the above extent accordingly.

d) There shall be no order as to costs.