Jitendra Sharma v. M/S Spytech Buildcon Private Limited, Geetash Class Of Pearl, K-48

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Miscellaneous Appeal No. 2291/2022 1. Marshal Sharma S/o Late Shri Keshav Dev Sharma,Resident Of Keshav Pearl Palacia, Plot No. 31, TakhteshahiRoad, Kanota Bagh, Jaipur.Resident Of Keshav Pearl Palacia, Plot No. 31, TakhteshahiRoad, Kanota Bagh, Jaipur. 2. Arvind Sharma S/o Late Shri Keshav Dev Sharma,Resident Of Keshav Pearl Palacia, Plot No. 31, TakhteshahiRoad, Kanota Bagh, Jaipur.Resident Of Keshav Pearl Palacia, Plot No. 31, TakhteshahiRoad, Kanota Bagh, Jaipur. 3. Jitendra Sharma S/o Late Shri Keshav Dev Sharma,Resident Of Keshav Pearl Palacia, Plot No. 31, TakhteshahiRoad, Kanota Bagh, Jaipur.Resident Of Keshav Pearl Palacia, Plot No. 31, TakhteshahiRoad, Kanota Bagh, Jaipur. ----Appellants Versus M/s Spytech Buildcon Private Limited, Geetash Class Of Pearl, K-48-49, L/543, Income Tax Colony, Tonk Road, Jaipur Through ItsDirector Shri Praveen Jain S/o Shri G.c. Jain, Resident Of 602,Pearl Pleasure, B-134, Rajendra Marg, Bapu Nagar, Jaipur. ----Respondent For Appellant(s) : Mr. Maneesh Sharma, Adv. Mr. Shreyansh Sharma, Adv. For Respondent(s): Ms. Sonal Singh, Adv. for Mr. Alok Garg, Adv.Garg, Adv. HON'BLE MR. JUSTICE PANKAJ BHANDARI HON'BLE MR. JUSTICE BHUWAN GOYAL Judgment Reserved onPronounced on(Per Hon’ble Pankaj Bhandari, J) 05/10/202309/10/2023 1.Claimants/appellants have preferred this Civil Misc.Appeal under Section 37(1)(c) of the Arbitration and ConciliationAct, 1996 read with Section 13(1A) of the Commercial Courts Act,2015 against the Order dated 24.06.2022 passed by CommercialCourt No.2, Jaipur Metropolitan-II, Jaipur, whereby objection application filed by the appellants/claimants under Section 34 ofArbitration and Conciliation Act, 1996 challenging the Award dated15.04.2019 was rejected. 2.It is contended by counsel for the claimants/appellantsthat a Development Agreement (hereinafter referred to as‘agreement’) was entered into between the appellants and therespondent on 03.09.2009. As per the agreement, the developerwas to construct flats, 62% of the constructed area was to beretained by the owner and 38% was to be given to the developer.It is contended that certain disputes cropped-up between theparties and the same were settled under mediation by theMediator on 20.09.2014. In the Award, following arbitral questionwas framed by the Arbitrator:- “Whether the excess area after the division of theshare of building according to the agreement dated03.09.2009 is 415.00 sq. ft. or more than thatlying in the share of M/s. Spytech Buildcon Pvt.Ltd? If Yes, what amount is to be paid by M/s.Spytech Buildcon Pvt. Ltd. to the owners pertainingto this excess area or in alternative, whether incase if owners are ready to purchase the areasfrom M/s. Spytech Buildcon Pvt. Ltd. including theexcess area, what amount is to be paid by theowners to M/s. Spytech Buildcon Pvt. Ltd”. 3.It is argued that the appellant-owner quoted the rateper sq. ft @ Rs.15,000/-, whereas the developer quoted the rate@ 5,500/- per sq. ft. The Arbitrator took the middle path anddetermined the rate @ Rs.10,000/- per sq. ft. It is also arguedthat there was no document or material to arrive at the conclusionwith regard to rate per sq. ft. It is also contended that a fixed 3.It is argued that the appellant-owner quoted the rateper sq. ft @ Rs.15,000/-, whereas the developer quoted the rate@ 5,500/- per sq. ft. The Arbitrator took the middle path anddetermined the rate @ Rs.10,000/- per sq. ft. It is also arguedthat there was no document or material to arrive at the conclusionwith regard to rate per sq. ft. It is also contended that a fixed deposit of Rs.50 lakh was lying with the appellants. LearnedArbitrator while calculating the share of excess area of 415 sq. ft.with the developer, valued it @ Rs.41,50,000/- and adjusted withthe amount lying with the appellants and directed the appellantsto refund an amount of Rs.8,50,000/- to the developer. It iscontended that there was no counter claim by the respondent andthe Arbitrator has erred in setting off the amount lying in fixeddeposit and has further erred in directing the appellants to refundthe amount of Rs.8,50,000/- and on non-payment, to pay interestthereon. It is also contended that as per the terms of theagreement, all dues towards the State authorities was to beshared in the ratio of 62:38. State authorities have demandedmoney and the documents pertaining to the same were on record,however, learned Commercial Court in the impugned order hasmentioned that no documents have been produced before theCourt. 4.It is contended by counsel for the appellants that theAward is patently illegal and such ground is available under thestatue for setting aside a domestic Award. It is contended that thedecision of the Arbitrator is perverse and irrational, hence, thesame should not have been affirmed by the Commercial Court. Inthis regard, counsel for the appellants has placed reliance on PatelEngineering Ltd. Vs. North Eastern Electric Power Corporation Ltd.(2020) 7 SCC 167. It is also contended that it is not permissiblefor an Arbitrator to travel beyond the terms of reference. If awardgoes beyond reference or there is an error apparent on face ofaward, it would be open to court to interfere with such award. Reliance in this regard has been placed on MSK Projects India (JV)Ltd. Vs. State of Rajasthan & Anr. (2011) 10 SCC 573. 5.Learned counsel appearing for the respondent hasopposed the appeal. It is contended that Arbitrator has decidedthe dispute which was referred to him. Arbitrator has come to theconclusion that 415 sq. ft. excess area was lying with therespondent. On the basis of last registry of that area, Arbitratorhas valued the excess area @ Rs.41,50,000/-. It is contended thatthe Arbitrator has passed the Award on the basis of materialavailable and the learned Commercial Court has upheld the Award.There is concurrent finding of facts and the scope of Section 37 ofArbitration Act is limited. 6Counsel for the respondent in this regard has placedreliance on U.H.L. Power Company Ltd. Vs. State of HimachalPradesh (2022) 4 SCC 116, Heera Singh Vs. State of RajasthanAIR 2007 Raj. 213, Navodaya Mass Entertainment Ltd. Vs. JMCombines (2015) 5 SCC 698, Swan Gold Mining Ltd. Vs.Hindustan Copper Ltd. (2015) 5 SCC 739. 7.It is also contended by counsel for the respondent thatduring pendency of the Arbitration proceedings, Arbitrator hadretained a cheque of Rs.50 lakh vide order dated 19.01.2015.Thus, Rs.50 lakh was retained in the Arbitration proceedings andthe Arbitrator had all rights to adjust the amount of excess areawith the cheque which was with the appellants. It is contendedthat since the security amount was retained by the order ofArbitrator, he had the jurisdiction to deal with the amount whilepassing the Award. Counsel for the respondent in this regard has placed reliance on MMTC Ltd. Vs. Vedanta Ltd. AIR 2019 SC 1168. 8.It is also contended that respondent has alreadysubmitted an indemnity bond with the appellants and he is boundto honour the said bond, in case of dues outstanding towards theGovernment Agency. placed reliance on MMTC Ltd. Vs. Vedanta Ltd. AIR 2019 SC 1168. 8.It is also contended that respondent has alreadysubmitted an indemnity bond with the appellants and he is boundto honour the said bond, in case of dues outstanding towards theGovernment Agency. 9.We have considered the contentions and have perusedthe Award as well as the order passed by the Commercial Court. 10.It is evident that prior to the Arbitration proceedings,the disputes had cropped up between the parties, which werereferred to mediation and certain issues were settled on20.09.2014 by the Mediator. The only dispute which was referredto the Arbitrator was as to whether there is any excess area of415 sq. ft. with the developer and if yes, as to what amount is tobe paid by the developer to the owner. In this regard, learnedArbitrator had come to the conclusion that excess area of 415 sq.ft. was in possession of the developer. No evidence was led byboth the parties with regard to the present rate of per square feetarea at Takht-e-Shahi Road, Jaipur. Therefore, the Arbitratorlooking to the DLC rate of the land, the luxurious furnishings,finishings and facilities of the flat considered the rate @Rs.10,000/- per sq. ft. and accordingly, came to the conclusionthat the developer has excess area worth Rs.41,50,000/-. 11.Since Arbitrator is a person who is appointed byconsent of the parties as held by the Apex Court, the decision ofan Arbitrator is binding on the parties and the power to set asidethe Award can be exercised only in cases where the Court findsthat the arbitral award is on the face of it erroneous or patently illegal or in contravention of the provisions of the Act. The ApexCourt in Swan Gold Mining Ltd. (supra) has held that the Courtshall not ordinarily substitute its interpretation for that of theArbitrator and that the Arbitrator appointed by the parties is thefinal judge of the facts. The finding of facts recorded by himcannot be interfered with on the ground that the terms of thecontract were not correctly interpreted by him. In the present casein hand, the finding of the learned Arbitrator is a finding of factwhich has been upheld by the Commercial Court, hence, we donot find any error in the calculation arrived at by the learnedArbitrator and the objection of the appellant on this ground is notsustainable. 12.The next objection to the Award raised by theappellants was that the Arbitrator has directed the appellant toset-off Rs. 41,50,000/- with the security deposit of Rs.50 lakhretained by them in the arbitration proceedings. It is contendedthat such was not the terms of reference and the Awardtantamounts to allowing the counter-claim whereas, there was nocounter-claim by the respondent in the present case. 13.We are of the considered view that such an objectionalso cannot be raised for the very reason that in the samearbitration proceedings, Rs.50 lakh was directed to be retained bythe appellants as security vide order dated 19.01.2015. The orderwas passed by the Arbitrator and thus, the Arbitrator had all therights to direct the appellants to set-off Rs.41,50,000/- from theamount retained by them and refund Rs.8,50,000/- to thedeveloper. Such an Award passed by Arbitrator cannot be said tobe beyond the terms of reference. 13.We are of the considered view that such an objectionalso cannot be raised for the very reason that in the samearbitration proceedings, Rs.50 lakh was directed to be retained bythe appellants as security vide order dated 19.01.2015. The orderwas passed by the Arbitrator and thus, the Arbitrator had all therights to direct the appellants to set-off Rs.41,50,000/- from theamount retained by them and refund Rs.8,50,000/- to thedeveloper. Such an Award passed by Arbitrator cannot be said tobe beyond the terms of reference. 14.Apex Court in MMTC Ltd. (supra) has held that whileinterpreting the terms of a contract, the conduct of parties andcorrespondences exchanged would also be relevant factors and itis within the arbitrator’s jurisdiction to consider the same. In thepresent case, this cheque amount was retained by the claimants infurtherance of the order of the Arbitrator, thus, the Arbitrator wasentitled to pass an order with regard to set-off of the amountpayable by the developer against the amount retained by theappellants. Thus, there is no error in the Award and learnedCommercial Court has also not committed any error in dismissingthe application under Section 34 of the Arbitration and ConciliationAct, 1996. Judgments cited by counsel for the appellants on factshave no applicability to the present case. 15.We do not find any force in the present Civil Misc.Appeal and the same is accordingly, dismissed. 16.Stay application stands disposed. (BHUWAN GOYAL),J(PANKAJ BHANDARI),J CHANDAN /