1 IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 12.03.2009 CORAM THE HONOURABLE MR.JUSTICE S. RAJESWARAN O.P. No.910 of 2000 M/s.Sudsun Housing Development India Ltd., Rep. by its Vice President, Business Development Mr.Sreenivasamurthy, Coromandal Towers, 816/817, Poonamallee High Road, Kilpauk, Chennai 600 010. .. Petitioner Vs. 1. (a) Pradeep Dugar (b) Lata Dugar 2. T.Shreedhar Rao 3. Amar Bipin Amin 4. Sangeetha Jain 5. (a) Master Rahul Modi, Minor Rep. by his Natural Guardian and father Mr.Jyoti Modi (b) Anita Modi 6. Bharat C.Shah 7. Ramesh Kumar Jain 8. N.P.K.Menon .. Respondents Petition filed under Section 34 of the Arbitration and Conciliation Act 1996 to set aside the Award dated 21.08.2000 passed in Arbitration Case No.1 to 7 of 2000 by the eighth respondent. For Petitioner : Mr.George Cheriyan For Respondents : Mr.Venkatavaradan **** O R D E R The petitioner is challenging the award dated 21.08.2000 passed by the eighth respondent/Arbitrator, under Sec.34 of the Arbitration and Conciliation Act 1996. https://hcservices.ecourts.gov.in/hcservices/ 2 2. The facts are as under: The petitioner is engaged in the business of promoting flats. They entered into an agreement with the owners of the property bearing Door No.42, South Boag Road, T.Nagar, Chennai 17, for the development of the property. Pursuant to the above agreement with the owners of the said property, the owners conveyed by sale undivided shares in the above said property to the respondents 1 to 7 herein by different sale deeds. Thereafter, the petitioner entered into an agreement with the respondents 1 to 7 herein, for putting up construction in the said property. The construction of the building was completed in June 1997 and the flats were handed over to the respondents 1 to 7 from June 1997 onwards. After receiving their respective apartments, the respondents 1 to 7 created problems which necessitated the petitioner to file a Civil Suit in O.S.No.2544 of 1998 before the IV Assistant City Civil Court, Chennai. Along with the suit, an application in I.A.No.6250 of 1998 was filed by the petitioner for an interim injunction and the City Civil Court granted an order of interim injunction restraining the respondents 1 to 7 herein from interfering with the peaceful possession and enjoyment of basement and the entire terrace area of the building. Respondents 1 to 7 herein approached the High Court in O.P.No.647 to 653 of 1998 and this court by order dated 10.12.1999 appointed 8th respondent as the sole Arbitrator to resolve the disputes between the parties. 3. According to the petitioner, the eighth respondent/Arbitrator appointed a Chartered Engineer to inspect the building and to submit a report as to whether the building was built up according to the approved plan and in terms of the Construction Agreement. The Engineer inspected the building on several occasions in the absence of the petitioner and filed his report without giving an opportunity to the petitioner to present their case. The https://hcservices.ecourts.gov.in/hcservices/ 3 petitioner also filed their objections for the report of the Engineer, but, it is contended by the petitioner that the Arbitrator passed an award on 21.08.2000 in favour of the respondents 1 to 7 solely on the basis of the report filed by the Chartered Engineer. Aggrieved by the award dated 21.08.2000 passed by the eighth respondent/Arbitrator, the petitioner filed the above Original petition under Sec.34 of the Arbitration and Conciliation Act 1996 to set aside the same. 4. Respondents 1 to 7 entered appearance through their counsel and filed a common counter affidavit supporting the award and seeking to dismiss the petition. 5. Heard the learned counsel for the petitioner and the learned counsel for the respondents 1 to 7. I have also gone through the entire records including the impugned award passed by the eighth respondent/ Arbitrator. 6. Before the 8th respondent/arbitrator, respondents 1 to 7 jointly filed a Claim petition and also filed separate individual claim statements in respect of their individual claims. In the common claim petition filed by them jointly, it was stated that they entered into a Construction Agreement with the petitioner for the construction of their flats and the agreement includes a provision for providing certain common amenities for the benefit of the flat owners. According to the respondents 1 to 7, the common amenities to be provided include 1. Care Taker / Security Room and 2. Landscaped surroundings 7. They contended that these amenities were not provided even though they paid for the same. It is stated by the respondents 1 to 7 that the Block of the building should have a basement as per the sanctioned plan for the purpose of installation of Generator and the Electricity Main Board. The open terrace, leaving apart a portion exclusively reserved for the 6th respondent's use, shall be https://hcservices.ecourts.gov.in/hcservices/ 4 available for the common use of the other flat owners. But, contrary to the undertaking given by them, the petitioner manipulated the construction of the basement and extended it over and above the area sanctioned in the approved plan. Instead of providing the Electricity Main Board and installing the Generator in the sanctioned basement area, they were installed in the unapproved portion of the basement. That apart, the petitioner is claiming ownership over the open terrace portion which was reserved for the common use and enjoyment of the flat owners. 8. Further, the undertaking given by the petitioner herein that they would not violate the sanctioned plan was later on violated by the petitioner. The suit filed by the petitioner in O.S.No.2544 of 1998 was resisted by the respondents 1 to 7 by filing an application under Sec.8 of the Arbitration and Conciliation Act 1996. After taking possession, it was stated by the respondents 1 to 7 that they noticed several serious defects in the construction, for which, they filed separate claim statements. It is their further contention that the petitioner has been taking steps to sell the unapproved basement area to third parties. They formed an Association and wrote to the petitioner on 16.03.1998 pointing out the defects and the works which have not been carried out by the petitioner. A reply dated 23.03.1998 was sent by the petitioner wherein it was accepted that unapproved portions of the basement area was measuring about 2884 sq.ft. To stop the petitioner from selling the upapproved basement area to third parties, respondent 1 to 7 filed O.A.No.216 of 1999 before this court under Sec.9 of the Arbitration and Conciliation Act 1996, for an injunction restraining the petitioner from disposing of the unapproved area in the basement. This court granted injunction as prayed for and the application was closed by the High Court, after the https://hcservices.ecourts.gov.in/hcservices/ 5 petitioner gave an undertaking that they would not sell the unapproved basement portion to third parties till the completion of the arbitration proceedings. 9. According to the respondents 1 to 7 herein, the following defects were found in the construction and they have to be rectified by the petitioner as per the construction agreement: 1. Fixing proper granite stones in the entrance as well as in the lobby near the lift and also in the common area. 2. Proper provision of lighting in the common area as well as in the front and side set-back area of the premises; 3. Providing window shutters in the staircase windows on the western side. 4. Rectification of the water leakage from the terrace to the lift area on the third floor; 5. Provision of proper storm water drain from the open terrace area so as to prevent flooding of staircase. 6. The Corpus fund collected from the respondents 1 to 7 were not returned and therefore, the same is to be returned by the petitioner. 10. The respondents 1 to 7 therefore claimed a sum of Rs.10 lakhs towards damages and also for a direction directing the petitioner to install the Generator and the Electricity Main Board in the approved area. They also sought for an injunction restraining the petitioner from alienating the entire basement area and also for a direction directing the petitioner to rectify the defects in the construction. Yet another direction was also sought for directing the respondents 1 to 7 to pay a sum of Rs.3.5 lakhs for not providing the Security/ Care Taker Room, land-scapped surroundings and for further direction directing the petitioner to return the Corpus fund collected from the respondents 1 to 7 for common amenities with interest at the rate of 24%. https://hcservices.ecourts.gov.in/hcservices/ 6 11. In the individual claim statements filed separately, the first respondent contended that the Electrical wiring done by the petitioner was extremely poor and short-circuit and tripping were common. Therefore, another electrician was engaged and the entire electrical wiring was re-done at their cost. The points which were not provided by the petitioner, were also got done through the same electrician. Inspite of requesting the petitioner to supply the electric wiring drawings, the petitioner refused to supply the drawings. It was further pointed out that the petitioner charged a sum of Rs.60,000/- for providing Open Car park, but, the same was not at all provided. What was given to them is only a portion earmarked in the plan for the set-back area for parking a Single Car. Therefore, the first respondent claimed a sum of Rs.2.50 lakhs as damages for not providing covered Car Park, Rs.50,000/- for re-doing the electrical work, Rs.1.50 lakhs for not providing fittings and accessories, a sum of Rs.2 lakhs for poor finish and cracks and a sum of Rs.60,000/- for the Open Car Park. 12. The second respondent in his separate claim statement accused the petitioner of providing defective electrical wiring and he also had to re-do the electrical wiring by engaging another electrician. He paid a sum of Rs.75,000/- for providing a open Car park, but, the same was not provided. Therefore, he claimed a sum of Rs.2.50 lakhs for the covered Car Park, Rs.40,000/- for re-doing the electrical work, Rs.50,000/- for not providing the fittings and accessories and Rs.1.50 lakhs for poor finish and cracks and Rs.75,000/- for Open Car Park. 13. Similar claims were individually made by the third to 7th respondents respectively. 14. The petitioner herein filed a counter statement common to all the claim petitions. According to the petitioner, it was agreed between the parties that the https://hcservices.ecourts.gov.in/hcservices/ 7 construction would be made subject to the construction of a basement area which was to be in the exclusive ownership, use and enjoyment of the petitioner. According to the petitioner, respondents 1 to 7 herein did not state that a Security Room and landscaped area have been provided by them at their own cost to satisfy the claim of Rs.3.50 lakhs in this regard. The specific case of the petitioner is that all along the respondents 1 to 7 agreed that the basement area could be owned by the petitioner and in fact the Association formed by the Flat owners also accepted the title of the petitioner to the basement area. It was admitted by the petitioner that a portion of the basement area is an unauthorised construction and steps are being taken to regularise the same by C.M.D.A. So far as the terrace area is concerned, it was contended by the petitioner that there was a clear covenant in favour of the petitioner to use the terrace area. At no point of time, the petitioner agreed to use and enjoyment of the open terrace by respondents 1 to 7. The petitioner stated that they did not try to sell the basement area to third parties. Even though it was denied by the petitioner that there are no defects, an undertaking was given by them that they would be willing to rectify any defect, if any. 15. On the basis of the above pleadings, the 8th respondent/Arbitrator framed the following issues: (1) Whether the basement was built in violation of the sanctioned plan by C.M.D.A. ? (2) Whether the respondent has a right to retain a portion of the terrace ? (3) Whether the claimants are entitled to damages as mentioned in prayer No.1 of the claim statement, if so, what is the quantum ? (4) Whether the respondent is bound to shift and install the Generator and Electricity Main Board as mentioned in prayer 2 of the Claim Statement ? https://hcservices.ecourts.gov.in/hcservices/ 8 (5) Whether the claimants are entitled to an order in the matter of permanent injunction as prayed for in prayer No.3 of the claim petition ? (6) Whether the claimants are entitled to Rs.3.50 lakhs as damages for not providing Security/Caretaker room and landscapped surroundings ? (7) Whether the respondent is liable to return the Corpus fund as claimed in prayer No.6 ? (8) Whether the claimants are entitled to the relief sought for in Claim VII (A) of para 7 of the amended claim statement ? (9) Whether the claimant No.1, Pradeep Dugar and Lata Dugar are entitled to covered Car Park as claimed in their claim statement ? (10) Whether the respondent was justified in collecting various amounts ranging from Rs.60,000/- to Rs.75,000/- from the claimants for providing only open Car Park ? (11) Whether the entire electrical wiring system is defective and in violation of the contract. If so, whether the claimants are entitled to the damages as claimed in the respective Claim petition ? (12) Whether the claims are entitled to the amounts as claimed in their respective Claims statements for not providing Covered Car Parks ? (13) Whether the claimants are entitled to the amounts as claimed, towards rectifying the cracks in the walls, and for cost of the repainting and the finish ? (14) To what relief ? 16. By consent of both the parties, the Arbitrator appointed a Chartered Engineer to inspect the property and to submit a report. The report of the Chartered Engineer was marked as Ex-A1. 59 documents were filed on behalf of respondents 1 to 7 and 22 documents were filed on behalf of the petitioner herein. 17. After evaluating the entire evidence adduced before him, the 8th respondent/Arbtirator found that there was a clear undertaking given by the petitioner herein to https://hcservices.ecourts.gov.in/hcservices/ 9 the respondents 1 to 7 that construction would be strictly in accordance with the approved plan and there would be no deviation at all. While considering the claim for terrace, the learned Arbitrator after going through Ex.C19 which is a letter written by the Director of the petitioner company found that the respondents 1 to 7 are entitled to use and enjoyment of the open terrace on the third floor. In Ex.C19, the Director of the petitioner clarified that the terrace immediately above the Type III Flat T2 would be reserved for all the owners of the building excepting the owner of Flat Type III – T1, who is the 6th respondent herein. Thus, the Ex.C19 was not at all repudiated by the petitioner and therefore on that basis, the learned Arbitrator came to the conclusion that the open terrace excluding the area reserved for the 6th respondent herein is available for the common use and enjoyment of all other respondents and the petitioner cannot put any restrictions on their enjoyment of the open terrace. This finding arrived at by the learned Arbitrator is purely on the basis of the evidence adduced before him and the reasons given by him for arriving at this finding are reasonable and cogent and therefore, the same cannot be assailed before this court under Sec.34 of the Arbitration and Conciliation Act 1996. 18. While considering the basement area, the Arbitrator found that the basement area is more than the area approved by the C.M.D.A. The report of the Chartered Engineer in Ex.A1 was considered in this regard. The area approved by the C.M.D.A. is 1036 sq.ft., but, what was constructed is, 3926 sq.ft. There is no doubt that the Generator and the Electricity Main Board are to be installed in the portion of the approved basement area. But, it was not installed in the approved area, but, in the unapproved area measuring about 2890 sq.ft. This unapproved construction was already admitted by the https://hcservices.ecourts.gov.in/hcservices/ 10 petitioner in their counter statement. Because of this, the learned Arbitrator observed that the petitioner was not in a position to explain why and how the basement area was enlarged in total violation of the agreement and also without the knowledge of the respondents 1 to 7. 19. The Arbitrator made it very clear that the Generator and the electricity main board were installed against the conditions contained in the construction agreement. After going through the agreement and the other accompanying facts, the Arbitrator is of the opinion that the basement as per the approved plan, absolutely belongs to the respondents 1 to 7 and other flat buyers. That apart, after going through Ex.C13 which is the letter written by the respondents 1 to 7 dated 16.03.1998 objecting to the sale of the unapproved basement area and Ex.C14 which is the reply sent by the petitioner and also Ex.R14 which is the letter dated 26.6.1997 written by the third respondent and Ex.R15 which is the letter dated 26.6.1997 written by the 4th respondent, came to the conclusion that the respondents 1 to 7 are the exclusive owners in so far as the basement area is concerned and the petitioner cannot have any right to make any claim with regard to the basement. This finding is also a pure factual finding which is based on the evidence adduced before him and I do not find any grounds to interfere with the same. 20. While considering the Issue Nos.9 and 12 together, which are the claims for not providing Open and Covered Car Parks, after going through the evidence, the Arbitrator found that the petitioner was bound to provide a Covered Car Park as per the construction agreement and the cost of it has been calculated and collected. Ex.C44 is the construction agreement of the respondent-5 wherein it was stated that for Open Car Park, the flat buyers paid at the rate of Rs.60,000/- each. But, the 5th respondent has not https://hcservices.ecourts.gov.in/hcservices/ 11 claimed in his claim statement refund of the amount paid by him for the Covered Car Parking. In the construction agreement, the actual cost of providing Covered Car Park has not been mentioned. The petitioner could only say that the cost of constructing one Car Park would be about Rs.96,350/-. On that basis, the learned Arbitrator raised a valid point that if the 5th respondent got a refund of Rs.96,350/- for each Covered Car Park, then how the petitioner could deny an identical amount as demanded by other respondents for not providing Covered Car Park as per the agreement. Therefore, the Arbitrator held that each of the flat buyers, excepting the 5th respondent, would be entitled to a sum of Rs.96,350/- as cost of the Covered Car Parking not provided for and paid for by them. 21. While dealing with the question of Open Car Park, the Arbitrator found that it is also included in the construction agreement, but, it was not provided at all. The Arbitrator did not accept the contention of the petitioner that the side set back areas and the rear set back areas could be used as Car park areas. The Arbitrator observed that the set-back area is a part of the common area and after going through Ex.C34, the Arbitrator found that a sum of Rs.60,000/- is added to each one of the individual flat buyers. Further, the Arbitrator found that for the respondent-2, Rs.75,000/- was collected (Ex.C24) instead of Rs.60,000/- and therefore, the Arbitrator held that the second respondent is entitled to receive a sum of Rs.75,000/-, whereas the other respondents are entitled to receive a sum of Rs.60,000/-, for not providing the Open Car Park. 22. The above said finding arrived at by the Arbitrator are well founded, reasonable, and logical and therefore, this court cannot interfere with the same while exercising its powers under Sec.34 of the Arbitration and Conciliation Act 1996. https://hcservices.ecourts.gov.in/hcservices/ 12 23. While considering the question of damages claimed by the respondents 1 to 7 (issue No.6), the Arbitrator found through Ex.A1 that the Care Taker/Security Room, Common Toilet and land-scapping surroundings have not been provided even though it is clearly stated in the construction agreement. The Arbitrator referred to item Nos.20 to 22 of the construction agreement in this regard. As the claim of Rs.3.50 lakhs estimated by the respondents 1 to 7 was not disputed by the petitioner, the Arbitrator awarded a sum of Rs.3.50 lakhs as a lumpsum for not providing the Security/Care Taker Room. This is also a factual finding which is reasonable and logical and therefore, this court cannot interfere with the same. 24. While considering Issue No.7 which is the claim for returning the Corpus Fund, the Arbitrator found that under the construction agreement, the deposits made by the flat buyers towards the Corpus Fund are liable to be refunded to the Association formed by the flat buyers after completion of the flats. Ex.C22 was specifically considered by the Arbitrator in this regard which specifically provides that the petitioner undertook to hand over the maintenance amount deposits to the flat buyers after deducting any amount for expenses incurred. After finding that 12 months period expired on 14.04.1997, the Arbitrator took that date on which the Corpus fund ought to have been returned by the petitioner. Therefore, the Arbitrator directed the petitioner to return the Corpus fund with interest at the rate of 12% per annum from 14.04.1997. 25. This is a very clear and reasonable finding based on the evidence and the same cannot be interfered with at all. 26. While considering issue No.13, the Arbitrator on the basis of the undertaking given by the petitioner to rectify the defects, directed the petitioner to rectify https://hcservices.ecourts.gov.in/hcservices/ 13 within a period of three months from the date of the award. 27. While considering the damages claimed for Rs.10,00,000/- (Rupees ten lakhs only) (Issue No.3), the Arbitrator awarded Rs.10,000/- to each of the respondents towards damages. 28. From the above, it is very clear that a reasoned award has been passed by the Arbitrator on the basis of the evidence adduced and therefore, I hardly find any grounds enumerated under Sec.34 of the Act 1996 to interfere with the same. 29. It was mainly contended on behalf of the petitioner that the Chartered Engineer appointed by the Arbitrator took sides with the respondents 1 to 7 who visited and inspected the property on three occasions without the presence of the petitioner. Therefore, the report is a biased one and the entire award has been passed by the learned Arbitrator only on the basis of the biased report of the Chartered Engineer. 30. I am unable to accept these submissions made on behalf of the petitioner. 31. First of all, out of the five visits made by the chartered Engineer, on two occasions, both the parties were present. After the final report was submitted by the Chartered Engineer, objections were also filed by the petitioner before the Arbitrator. The award also reveals that the learned Arbitrator has not solely relied on the chartered Engineer's report alone to pass the award as contended by the petitioner. In fact, the learned Arbitrator has considered the entire evidence adduced before him and gave findings independently on the basis of the evidence with clarity and cogency. Even assuming that the Chartered Engineer's report is bad, as the Engineer visited the spot on three occasions without the presence of the petitioner, still that cannot be a ground under Sec.34 of the Act 1996 to interfere with the award. https://hcservices.ecourts.gov.in/hcservices/ 14 32. In the result, I have no hesitation in upholding the Award and consequently, the Original petition is dismissed. No costs. The connected miscellaneous petitions are also closed. Sd./- S.R.J. 12.03.2009 //Certified to be true copy// Dated at Madras this the day of 2009. COURT OFFICER(O.S.) From 25th Day of September 2008 the Registry is issuing certified