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Judgment
P. Jyothimani, J.—This original petition-is filed under, Section 34(2)(iv) of the Arbitration and Conciliation Act,1996, to set aside the Arbitral Award dated 07.03.20S6 passed by the second respondent as a sole Arbitrator in so far as it relates to the direction issued against the petitioner to pay a sum of Rs. 99,438/- to the first respondent/claimant.
The petitioner being a builder, developed the property at Door No. 4-A in Survey No. 52 part, Jayaram Chetty Street, Thiruvanmiyur, Chennai 603041, Measutin an extent of 18.98 cents belong to one C. Gnanapraksh and the property at Door Nos. 16 and 17 Vembuliamman Koil Street, Thiruvanmiyur, Chennai 600041, comprised in Survey No. 50 51, and 55 of Thiruvanmiyur, village in the extent of 27.57 cents belonging to the first respondent/claimant and four others in the name of Thiruvanmiyur project. A memorandum of joint development agreement dated 01.05.2001 was entered between the parties. According to the petitioner, he has taken efforts for the said joint development of two properties. The owner of Survey No. 52(part) was to retain 3.000 sq.ft. of building area in the form fo three flats in the said project. The owners of Survey Nos. 50, 51, and 55, viz., P. Krishnan and Mrs. V. Nageswari have agreed to retain a flat each in the extent of 900 sq.ft. In the above said project, while the other owners, viz., Mrs. Chitra Nageswaran, the first respondent/claimant and K.K. Gnanasekaran, opted to take a flat each towards their share in another completed project of the petitioner at No. 11, Gokilan Street, Seethapathi Nagar, Velachery, called velachery Project, apart from cash payment.
According to the petitioner, based on the said understanding the first respondent took possession of a flat measuring 750 sq.ft. at Velachery Project on entering into said agreement dated 01.06.2001, without waiting for the completion of Thiruvanniyur Project. According to the petitioner, the said property allotted to the first respondent/claimant in Velachery Project was a prime property. As per the joint development agreement marked as Ex. C.2 dated 01.06.2001, the petitioner has allotted the said flat at Velachery to the first respondent/claimant and also paid the down payment of Rs. 2,40,000/- on various dates. However, when the last, amount of Rs. 10,000/- was tendered, the first respondent refused to receive the same and therefore, the petitioner has fulfilled the obligation as per the agreement. The first respondent/claimant has raised a dispute that she is entitled to a larger share in Thiruvanmiyur Project and therefore, claimed an amount of Rs. 13,94,560/- as the amount payable to her with interest.
The said dispute was referred to the second respondent, being the sole Arbitrator nominated by the first respondent/claimant on 19.02.2005. As per the calculation of the first respondent/claimant, she claimed about 40% of the constructed area, in Thiruvanmiyur Project and the petitioner has participated in the arbitration proceedings and filed his objection in detail. According to the petitioner, the reference to the learned Arbitrator was in respect of the dispute under the memorandum of joint development agreement dated 01.06.2001, marked as Ex. C.2, however, the first respondent/claimant by filing rejoinder, wanted to rely upon an earlier memorandum of agreement dated 11.02.2001, marked as Ex. C.1 entered into between the petitioner and the first respondent/claimant apart from four other owners of land in respect of Survey No. 50, 51 and 52 which according to the petitioner has been rescinded by the subsequent agreement dated 01.06.2001,, marked as Ex. C.2. Since it was beyond the purview of arbitration, the petitioner raised objection u/s 16(3) of the Arbitration and Conciliation Act, 1996. However, the learned Arbitrator has relied upon the earlier agreement dated 11.02.2001, marked as Ex. C.1 and granted the above said relief. The learned Arbitrator has agreed that the subsequent agreement dated 01.06.2001 marked as Ex. C. 2 has superseded the earlier agreement dated 11.02.2001 marked as Ex. C.1. Therefore, the main contention of the petitioner in attacking the arbitration award in respect of the portion as stated above is that,
(1) The learned Arbitrator instead of relying upon the agreement dated 01.06.2001 marked as Ex. C.2, has granted relief to the first respondent/claimant based on the earlier agreement dated 11.22.2001, marked as Ex. C.1, which stood rescinded after the subsequent agreement Ex. C.2 came into existence;
(ii) The award passed by the learned Arbitrator in so far as it directed the petitioner to pay an amount of Rs. 99,438.00 to the first respondent/claimant does not fall within the terms of arbitration, which was submitted for decision, and therefore, it is beyond the scope of arbitration agreement;
(iii) It was as per the terms of Ex. C.2 agreement dated 91,06.2021, the first respondent/claimant has taken possession of a flat measuring 750 sq.ft. at Velachery Project and also received an amount of Rs. 2,50,000/- and in such, circumstances, the late claim made by the first respondent/clamant by way of rejoinder based en the earlier agreement marked as Ex. C.1 in respect of stamp duty of Rs. 34,463/- and incidental: expenses of Rs. 60,975/- is actually beyond the terms of reference; and
(iv) The learned Arbitrator ought not to have drawn adverse inference against the petitioner for not producing accounts, since the reference itself not relates to production of accounts.
Mr. S. Rajasekaran, learned Counsel appearing for the petitioner would submit that on the factual position as stated above, the act of the learned Arbitrator in relying upon the earlier agreement Ex. C.1 dated 11.02.2001 on the premise as if the subsequent agreement Ex. C.2 dated 01.06.2001 was in continuation of the earlier agreement Ex. C.1, is not correct. He would also submit that the above said position is clearly against the provisions of Section 16(3) of Arbitration and Conciliation Act, 1996, since the decision of the learned Arbitrator is beyond the scope of his authority. He would further submit that when the first respondent/claimant by way of rejoinder has raised a new plea as if the previous agreement marked as Ex. C.1 dated 11.02.2301, was continued while the subsequent agreement Ex. C.2 dated 01.06.2001 was entered, immediately, thereafter, the petitioner has raised objection u/s 16(3) of the Arbitration and Conciliation Act, 1996 that the matter is beyond the scope of the authority of the learned Arbitrator and requested dismissal of the additional relief sought for in the rejoinder by the first respondent/claimant and in spite of the same, the learned Arbitrator has not considered the same, therefore, he prayed, for setting aside a portion of the said award as stated above.
The first respondent in spite of service has not chosen to appear.
I have heard the learned Counsel for the petitioner are perused the entire award including all the order documents corrected thereto.
It is no doubt true that the matter was referred to the learned Arbitrator, invoking the arbitration clause in the joint development agreement dated 01.06.2001, marked as Ex. C.2. However, the learned Arbitrator, in his award has found on fact that the cash amount agreed to be paid by the petitioner to the first respondent/claimant and other owners in addition to the allotment, of flats in the property. As payment of money consideration was referred to in the earlier agreement dated 11.02.2001, marked as Ex. C1 and it was only after adjusting the said amount of Rs. 50,000/-, the balance amount have been paid to the vendors, including the first respondent/claimant. It is seen in the award passed by the learned Arbitrator that in fact the first respondent/claimant through their counsel notice dated 20.11.2004, has claimed an amount of Rs. 11,92,740/- with details on the basis that the petitioner was entitled only to 60% of vacant land and the buildings and the first respondent is entitled 1/5th share in the remaining 43% as per the agreement, which was of course repudiated by the petitioner by reply notice and it was thereafter, the first respondent has made an amended claim of Rs. 13,94,560/- by the rejoinder notice dated 06.12.2034 marked as Ex. C5 and the first respondent/claimant has issued notice on 12.31.2085, appointing the second respondent as the sole Arbitrator as per Clause 30 of the joint development agreement dated 51.06.2031, which was objected to by the4 petitioner by saying such unilateral appointment of Arbitrator cannot be done and the petitioner has also filed a petition under Sections 6 and 12 of the Arbitration and Conciliation Act, 1996, to adjudicate the validity of appointment of an Arbitrator as a preliminary issue and ultimately, the said petition was withdrawn by the petitioner himself, accepting to the arbitration by the second respondent.
The Arbitrator has considered the claim of the first respondent/claimant that the petitioner has deducted the stamp duty and incidental charges to the extent of Rs. 99,138/- and such deduction is not warranted, since the first respondent/claimant is entitled for the allotment of a flat. The learned Arbitrator has also considered the objection raised by the petitioner u/s 16(3) of the Arbitration and Conciliation Act, 1996 and found that even as per the agreement marked as Ex. C.2 dated 01.06.2001, a reference has been made about the earlier agreement dated 11.02.2001, marked as Ex. C. 1, based on which an amount of Rs. 50,000/- was paid, and that was adjusted from the amount of Rs. 2,50,000/- to be paid by the petitioner to the first respondent/claimant and the remaining amount of Rs. 2 lakhs was agreed to be paid. The learned Arbitrator has also on fact found in paragraph 18 of the award that the petitioner, who was present in person agreed his liability to execute the sale deed in favour of the first respondent/claimant in respect of the Velachery Project at his cost under Ex. C.2 agreement dated 01.06.2001. The relevant passage in the award of the learned Arbitrator is as follows:
(18) At this stage, the promoter Mr. G. Ganesh, Mg. Partner, of Shri Lakshmi Homes, Unit of Dev Apartments, who was present, accepted his liability to executes a Sale Deed in favour of the Claimant in respect of the Velachery Flat that was given to him, at his cost under "C-2" Agreement dated 01.06.2001.
It was based on the clause contained in Ex. C.2 agreement dated 01.06.2001, which is as follows:
Whereas the Purchaser/Promoter agreed to allot a flat to the Fifth Vendor, Mr. R. Parameswari on her share at No. 11, Gokilan Street, Seethapathy Nagar, Velachary of an area of 750 sq.ft. And also the amount of Rs. 2,50,080/- (Rupees two lakhs, and fifty thousand, only) is agreed to be paid by the purchaser to the Fifth Vendor, the PARTY OF THE SECOND PART, out of which the purchaser has paid a sum of Rs. 50,000 (Rs. Fifty thousand only) vide C. No. 621689 dt. 11.02.2001 payable at Indian Bank, Besant Nagar, Chennai-90, as advance and the balance amount of Rs. 2,00,000/- (Rupees Two lakhs only) is agreed to be paid within 12 months or on completion of the project, whichever is later.
The learned Arbitrator has in fact coire to a conclusion that Ex. C.1 agreement dated 11.02.2001 is a foundation of the subsequent agreement Ex. C.2 dated 01.06.2001 and the rights of the parties under Ex. C.1 has not been given up and it was only modified later under Ex. C.2 agreement. The learned Arbitrator has also referred to Clause 25 of Ex. C.1 agreement dated 11.02.2001, which clearly states that the parties have mutually agreed to enter into a separate joint development agreement on delivery of requisite title deeds by the vendors to the purchaser/promoter and in view of the same and also considering the fact that it was under Ex. C.1 agreement a part amount of Rs. 50,000/- was given by the petitioner to the first respondent/claimant and that was adjusted in the amount of Rs. 2,50,000/- agreed under Ex. C2 agreement dated 01. 06.2001. Therefore, Ex. C.2 agreement dated 01.06.2001, is only a continuation of earlier agreement Ex. C1 dated 11.02.2001, by harmoniously construing both the said agreements. This is purely a factual finding given by the learned Arbitrator and absolutely there is nothing to interfere as if the Arbitrator has gone beyond the scope of his authority. In fact, on construing in, the above said manner on factual situation, the learned Arbitrator has only directed to pay an amount of Rs. 99,438/-, which are only incidental charges and stamp duty, deducted by the petitioner in respect of execution of the document. In view of the same, I do not see any reason to interfere with the award passed by the learned Arbitrator.
It is well established that an award of Arbitrator can be interfered only in cases where, it is contrary to the fundamental policy of Indian Law, the interest, of India or justice or morality or if it is -patently illegal. It is also well established that an award can be set aside only if there is an error of jurisdiction and not the exercise thereof.
On the factual position which I have stated above and is culled out from the award of the learned Arbitrator, there is absolutely no reason to interfere with the arbitration award. In view of the same, this petition fails and the same is dismissed. No costs.