IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 7.8.2009 Coram: The Honourable Mr.Justice P.JYOTHIMANI O.P.No.588 of 2007 and O.A.No.300 of 2009 M/s.Arunoday Developers rep. by its Proprietrix Mrs.Aruna Parwal No.7, Doctors' Lane Gole Market, New Delhi-110 001. .. Petitioner Vs. 1. M/s.Gemini Arts Private Ltd. rep. by its Chairman and Managing Director, Mr.Ravishankar Prasad 601, Mount Road, Chennai  600 006. 2. M/s.Green Gardens Private Limited rep. by its Chairman and Managing Director, Mr.Ravishankar Prasad 601, Mount Road, Chennai  600 006. 3. Justice Sri S.Ramalingam (Retired) Sole Arbitrator, No.9, Madha Church Road Mandavelipakkam, Chennai  600 028. .. Respondents Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996. For Petitioner : Mrs.Malini Ganesh For Respondents 1 & 2 : Mr.T.V.Ramanujun Senior Counsel for Mr.Y.N.Venkatraj ORDER This original petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity, "the Act") against the award of the learned Arbitrator dated 3.2.2007, granting the claimant before the Arbitral Tribunal an amount of Rs.14,00,000/- and Rs.90,11,070/-, in total Rs.1,04,11,070/- with interest at the rate of 6% from the date of the award till payment. The claimant before the Arbitral Tribunal has filed this original petition. 2. The brief facts leading to the filing of the arbitration proceedings are as follows: 2.1. Respondents 1 and 2, which are Companies, owned lands in the city and wanted to promote the lands as commercial complex by name "The City Centre Point". The petitioner is a property developer who wanted to extend area of its operation to Chennai. The said respondents have represented to the petitioner that they will obtain necessary planning permission from the authorities concerned for construction of basement and ground floor to third floor and have put up the construction accordingly and subsequently, obtained sanction for raising multistoried construction up to 10 floors and that they were interested to assign the right of construction from fourth to tenth floors in favour of third party developers. 2.2. The petitioner has agreed to take up the construction right of fourth to tenth floors. Accordingly, the Development Agreement was entered on 17.3.1988 and the work was entrusted to the petitioner for a consideration of Rs.2,88,22,140/-. As per the development agreement, the construction was to the extent of 1,87,180 sq.ft. of FSI. A sum of Rs.1,44,11,070/- which represents 50% of the total consideration was to be paid by the petitioner on behalf of respondents 1 and 2 to the material suppliers involved in the supply of materials to the respondents up to third floor. The balance 50% was agreed to be paid as follows: viz., (i) Rs.14,00,000/- to be paid before the execution of the agreement, (ii) Rs.90,11,070/- payable on signing the agreement; and (iii) Rs.40,00,000/- payable on or before 13.4.1988. The Development Agreement dated 17.3.1988 and a memo of consideration dated 17.3.1988 formed part of the agreement. 2.3. It is stated that the petitioner has paid Rs.1,10,61,070/- out of the 50% payable directly to respondents 1 and 2 and that apart the petitioner has spent an amount of Rs.73,44,618/-, which includes the payment made to the material suppliers on behalf of respondents 1 and 2. The petitioner is stated to have spent a total amount of Rs.1,84,05,688/- towards payments to respondents 1 and 2 under the Development Agreement. The construction right from fourth to tenth floors became vested in the petitioner upon such payment. However, respondents 1 and 2 have informed that sanction in respect of fourth to tenth floors was withdrawn by the Government and there was considerable delay and it was at that time respondents 1 and 2 executed a Supplementary Agreement dated 25.7.1990, agreeing to allot to the petitioner 35,450 sq.ft. of constructed area comprised in 29 units in ground to third floor that was being constructed by them. 2.4. The Supplementary Agreement dated 25.7.1990 was entered into taking note of the delay in respect of the contractual obligations under the Development Agreement and Rs.2,02,16,000/- was agreed under the Supplementary Agreement as consideration for allotment of 29 units of constructed portion from ground to third floor to the extent of 35,450 sq.ft. and 50% of the basement as car parking area. Respondents 1 and 2 also reserved the right to buy back the said allotted extent if they obtain revalidation on or before 30.6.1991 and on failure to perform the said obligation of getting revalidation of sanction, the 29 units would vest with the petitioner. Respondents 1 and 2, who were not able to obtain revalidation, by letter dated 13.6.1991 have confirmed allotment of 29 units stated above with specific earmarked portions. 2.5. However, respondents 1 and 2, thereafter, issued a legal notice on 23.5.1992 stating that there is a change in the management of the respondents and there was no possibility of getting revalidation and wanted to drop the project. Since there was no termination clause, the petitioner questioned the conduct of the respondents by way of reply dated 29.6.1992. Therefore, according to the petitioner, the present Management of the respondents was aware of the Supplementary Agreement and they, by letter dated 1.8.1992, have requested the petitioner to await the result of the writ proceedings filed in respect of the plan. 2.6. From the notification of the MMDA in the newspaper dated 26.10.1995, the petitioner came to know that respondents have unauthorisedly proceeded to put up construction up to tenth floor without involving the petitioner, which is a total breach of Development Agreement as well as Supplementary Agreement. The petitioner also learnt that respondents 1 and 2 have borrowed heavily from the Indian Bank. The petitioner issued a legal notice on 19.5.1997 about the breach committed by respondents 1 and 2 of the Development Agreement and Supplementary Agreement and invoked the arbitration clause. 2.7. Since respondents 1 and 2 have been prolonging, an application under Section 11 of the Act was filed before this Court and an arbitrator was appointed. In the meantime, the petitioner also moved an application under Section 9 of the Act and this Court has passed an order dated 24.12.1997 in O.A.Nos.566 and 567 of 1997 granting injunction against respondents 1 and 2 from in any manner dealing with the property or interfering with the ownership of the petitioner in respect of 29 units and 50% of the basement area. 2.8. After filing of the claim statement and reply statement and rejoinder, the petitioner also filed additional documents and let oral evidence. The respondents have not filed any document or let any evidence. The synopsis of the arguments were directed to be submitted before the Arbitral Tribunal, which was submitted by the petitioner on 17.6.2006 and by respondents 1 and 2 on 12.9.2006 and thereafter, the learned Arbitrator passed the award on 3.2.2007. 2.9. The award has proceeded mainly on the two issues, viz., (i) whether the petitioner had paid any amount to the respondents?; and (ii) whether the Supplementary Agreement was true and valid?. The learned Arbitrator has found that the Supplementary Agreement is suspicious and has not considered the amounts stated to have been indirectly paid by the petitioner on behalf of the respondents, even though accepted two out of three payments made by the petitioner. However, interest was awarded on the said amount only from the date of the award. 3. The award is questioned on various grounds, including:- (i) that there is an erroneous statement of fact to the effect that the petitioner has abandoned the contract and therefore, the respondents undertook to finish the work in respect of fourth to tenth floors; (ii) that the Arbitral Tribunal has held the Supplementary Agreement not acceptable having failed to take note of the fact that respondents 1 and 2 have not let in any evidence and the Arbitral Tribunal should have drawn an adverse inference against respondents 1 and 2 instead of placing reliance on the arguments of respondents 1 and 2; (iii) that the Arbitral Tribunal has failed to take note of the fact that while the Development Agreement was executed on 17.3.1988 and immediately thereafter the Supplementary Agreement was entered on 25.7.1990, during the time when the construction activities were going on, and chose to state that long after the construction, the Supplementary Agreement was brought, which creates suspicion that the material evidence has not been considered by the Arbitral Tribunal; (iv) that the Arbitral Tribunal has erred in stating that the Supplementary Agreement was not placed before the Board of Directors of the respondents while that was not the pleading of the respondents at all; (v) that the letter of allotment dated 13.6.1991 itself would show that the Supplementary Agreement was acted upon; (vi) that the Arbitral Tribunal has relied upon the written arguments submitted by the respondents long after, i.e., on 12.9.2006 and passed the award based on the written arguments; (vii) that the Arbitral Tribunal ought to have considered that the main relief claimed is in respect of the right vested on the petitioner regarding 29 units to an extent of 35,450 sq.ft., including 50% of the car parking area, which was pursuant to the Supplementary Agreement dated 25.7.1990; (viii) that the Arbitral Tribunal has failed to appreciate that, if respondents 1 and 2 plead fraud, they should have proved and there is absolutely no proof on the side of respondents 1 and 2 in respect of the alleged fraud regarding the Supplementary Agreement; (ix) that the award has been passed in disregard of Sections 28 and 31 of the Act; and (x) that even in respect of the finding given in favour of the petitioner the award of interest at the rate of 6% from the date of award has no reason at all. 4. The case of respondents 1 and 2 in the counter affidavit is: (i) that the memo of consideration dated 17.3.1988 does not constitute a proof for payment and as per the memorandum an amount of Rs.1,44,11,070/- is to be adjusted against the construction of ground to third floors and another sum of Rs.40,00,000/- was to be paid, and the said amounts were not paid and therefore, it is not correct for the petitioner to state as if the petitioner has spent Rs.1,84,05,688/- and therefore, the Arbitral Tribunal has found that the petitioner has failed to prove the indirect payment stated to have been made in respect of material suppliers and since the petitioner has not paid the entire consideration, the petitioner cannot claim as a matter of right the construction right in respect of fourth to tenth floors; (ii) that the cancellation of permission was because of the Government Order and the order of the Hon'ble Supreme Court, which is beyond the control of respondents and that when the performance of the Development Agreement became impossible there is no necessity for Supplementary Agreement at all and therefore, the fixation of Rs.2,02,16,000/- as consideration for allotment of 29 units of the constructed area and 50% of the basement as car parking area are denied stating that the Supplementary Agreement is vitiated by fraud and the allotment letter dated 13.6.1991, which is 15 days prior to the last date for revalidation is dubious in nature; (iii) that after the Indian Bank, which is the main bank of respondents 1 and 2, invited the present promoter to take over the respondents/Companies, notices were sent to all allottees terminating the agreement due to impossibility of performance of contract in view of the Government Order as well as the order of the Hon'ble Supreme Court; (iv) that when it is the case of the petitioner that after the Development Agreement they have established a site office, the petitioner has nevertheless chosen to state as if they came to know about the construction up to tenth floor based on the caution notice issued by the MMDA in the Hindu, which is false; (v) that the Arbitral Tribunal has given a finding that the petitioner has approached belatedly and therefore, the rate of interest cannot be disputed taking note of the delay caused by the petitioner; (vi) that the petitioner failed to furnish any documentary proof for payment of money directly to the material suppliers and also failed to prove the Supplementary Agreement supported by consideration for value of Rs.2,02,16,000/- even though the respondents have questioned the Supplementary Agreement and allotment letter at the earliest point of time; and (vii) that since the performance of contract became impossible, there is no question of any claim of compensation and the Arbitral Tribunal has correctly decided the same. 5.1. Mrs.Malini Ganesh, learned counsel appearing for the petitioner would submit that respondents 1 and 2 have not let in any evidence or produced any document while the petitioner has substantiated the entire claim and the Arbitral Tribunal decided the issue based on the reply filed by the respondents belatedly. It is her submission that when the oral evidence has been permitted there is no reference to the same in the award. 5.2. It is her contention that the Development Agreement having not been disputed it is not open to the respondents to dispute the Supplementary Agreement. She would submit that the finding of the Arbitral Tribunal that the Supplementary Agreement is suspicious is uncalled for. 5.3. She would further submit that when fraud is alleged the same has to be proved beyond reasonable doubt and the Arbitral Tribunal has not taken note of the same. 5.4. To substantiate her contentions, she would rely upon the following judgments: (i) Oil and Natural Gas Corporation Limited v. SAW Pipes Limited, AIR 2003 SC 2629; (ii) McDermott International Inc. v. Burn Standard Co. Ltd. and Others, 2006 (2) ALR 498 (SC); (iii) Tyagaraja Mudaliyar and another v. Vedathanni, AIR 1936 PC 70; (iv) Narayanan v. Official Assignee, Rangoon, (28) AIR 1941 PC 93; (v) Hansraj Gupta and others v. Dehra Dun-Mussoorie Electric Tramway Co. Ltd., AIR 1940 PC 98; (vi) Govinda Naik Gurunath Naik v. Gururao Puttanbhat Kadekar since deceased by L.Rs. Mrs.Padmavathi Gururao Kadekar and others, AIR 1971 Mysore 330; (vii) Govindram Gordhandas Seksaria and another v. State of Gondal by His Highness the Maharaja of Gondal and others, AIR (37) 1950 PC 99; (viii) Shri Krishan v. Kurukshetra University, AIR 1976 SC 376; and (ix) Vijay Packaging (Dissolved Firm), rep. by its Former Partner Mr.R.Thiagarajan v. Spectra Packs Pvt. Ltd., Madras and another, 2002 (3) ALR 44 (Madras) (DB). 6.1. On the other hand, Mr.T.V.Ramanujun, learned Senior Counsel appearing for the respondents would submit that, on the facts of the case, it is clear that the initial burden vested on the petitioner has not been discharged. It is stated that the copies of the agreements, which are produced before the Arbitral Tribunal, are the photo stat copies attested and the petitioner has not taken any steps to prove that the original copies are not available and in the absence of producing the originals it should be taken that the petitioner has not discharged the initial burden. He would also submit that when photo stat copies attested of the original documents are filed there is a possibility of manipulation. He would also question the veracity of the stamp papers on which the Supplementary Agreement has been entered, which has resulted in the suspicious character. It is his contention that the Supplementary Agreement itself has not been proved by examining the person concerned. 6.2. It is his submission that under Section 34 of the Act, while deciding about the award, this Court cannot re-appreciate evidence even if another view is possible and in spite of it, the Arbitral Tribunal has taken one view and it is not for the Court to interfere. 6.3. According to him, there is no violation of principles of natural justice before the Arbitral Tribunal. 6.4. He would rely upon the judgments in: (i) J.Naval Kishore v. D.Swarna Bhadran, 2008 (1) CTC 97; (ii) Ircon International Limited v. Arvind Construction Company Limited and another, 2000 (1) RAJ 111 (Delhi); (iii) Tamil Nadu Civil Supplies Corporation Ltd. v. Albert & Co., 2000 (3) CTC 83; (iv) M/s.Sarkar Enterprises v. M/s.Garden Reach Shipbuilders & Engineers Ltd., AIR 2002 Calcutta 65; (v) Brick Steel Enterprises v. The Superintending Engineer, PWD, Salem, 2006 (5) CTC 519; (vi) Union of India v. M/s.India Proofing and General Industries, Kanpur, 2000 (2) RAJ 502 (Bombay); (vii) India Tourism and Development Corporation Ltd. v. T.P.Sharma, 2002 (3) RAJ 360 (Delhi); (viii) Kanha Credit & Housing Pvt. Ltd. v. Janacim Electronics, AIR 2005 Delhi 415; (ix) Larsen and Toubro v. Puri Construction Limited and others, 2009 (1) RAJ 654 (Delhi); (x) Himachal Joint Venture v. Panilpina World Transport (India) Pvt. Ltd., 2008 (4) RAJ 669 (Delhi); (xi) Gurdeep Kaur v. C.K.Bedi and another, 2008 (4) RAJ 448 (Delhi); (xii) National Highways Authority of India v. Afcons Infrastructure Limited, 2008 (4) RAJ 381 (Delhi); (xiii) Delhi Development Authority v. Anand and Associates, 2008 (2) RAJ 594 (Delhi); (xiv) Government of NCT of Delhi v. Khem Chand and another, AIR 2003 Delhi 314; (xv) Anil Rishi v. Gurbaksh Singh, [2006] 5 SCC 558; (xvi) Thyssen Stahlunion Gmbh v. Steel Authority of India, AIR 2002 Delhi 255; (xvii) Em and Em Associates v. Delhi Development Authority, AIR 2003 Delhi 128; and (xviii) S.P.Puri v. Alankit Assignments Ltd., 2009 (1) RAJ 243 (Delhi). 7. I have heard the learned counsel for the petitioner and the learned Senior Counsel for the respondents, perused the documents as well as the pleadings and given my anxious thoughts to the issue involved in this case. 8. It is seen, on fact, that respondents 1 and 2, which are companies connected to each other, owned 13 grounds and 18.03 sq.ft. and 7 grounds and 597 sq.ft. in Mylapore. They have applied for the sanction of construction of a multistoried building and that was sanctioned in G.O.Ms.No.1729, dated 16.11.1987 and respondents 1 and 2 have put up part construction in the basement and three floors. The agreement entered into between the petitioner and the respondents, which is called a Development Agreement, shows that the petitioner has approached respondents 1 and 2 to acquire the rights to construct from fourth to tenth floors in the complex named "The City Centre Point" and it was agreed that the cost payable by the petitioner towards consideration, for the transfer by the respondents in respect of 1,87,180 sq.ft. of FSI has to be worked out at the rate of Rs.153/- per sq.ft. of FSI and that in respect of the basement car parking area, the same has to be enjoyed equally in common between the petitioner and the respondents and the cost has to be borne on the same basis, viz., 50% to be met by the petitioner and the remaining 50% by the respondents, and the petitioner has agreed to acquire the said construction right for a consideration of Rs.2,86,38,540/-. 9. In respect of the agreed consideration, which was to be paid, the petitioner paid an advance amount of Rs.14,00,000/- and another amount of Rs.90,11,070/- at the time of signing of the agreement, which amount has also been found by the Arbitral Tribunal to have been paid by the petitioner to respondents 1 and 2 and another amount of Rs.40,00,000/- was to be paid on or before 13.4.1988, stating that if there is any delay the petitioner shall be liable to pay interest at the rate of 24% per annum and a further sum of Rs.1,44,11,070/- was to be paid by the petitioner directly to the material suppliers involved in the supply of materials for the construction up to third floor on behalf of respondents 1 and 2. 10. While the petitioner has paid the first two amounts of Rs.14,00,000/- and Rs.90,11,070/-, the balance amount has not been paid due to the reason that the Government has issued a show cause notice dated 28.4.1989 questioning the validity of construction from fourth to tenth floors and subsequently, withdrew the sanction in respect of fourth to tenth floors based on the order of the Hon'ble Supreme Court. 11. It is the case of the petitioner, as a claimant before the Arbitral Tribunal, that it was due to the above said reason a Supplementary Agreement was entered on 25.7.1990 between the petitioner and respondents 1 and 2, in which it was agreed that the petitioner and respondents 1 and 2 shall jointly agitate the matter in the Court against the show cause notice of MMDA and in the meantime, respondents 1 and 2 have agreed to allot in the basement to third floor, which was by that time put up by respondents 1 and 2, in favour of the petitioner or its nominees 29 units containing 35,450 sq.ft. valued at Rs.2,02,16,000/- and the consideration for the transfer of the said units was agreed by respondents 1 and 2 to be set-off against the claims of the petitioner. 12. As per the said Supplementary Agreement, there is a further clause that the petitioner shall have the first charge and/or lien over the said units till revalidation of the MMDA sanction to the fourth to tenth floors is obtained before 30.6.1991 and if such revalidation is obtained, the units shall stand released from the charge and the petitioner shall handover the allotment letters to the respondents, in which event the petitioner, being developer, should pay the balance amount to the respondents in terms of the Development Agreement dated 17.3.1988 and continue the construction from fourth to tenth floors. In case of failure to obtain revalidation of MMDA sanctioned plan, the units shall be deemed to have vested with the petitioner. Therefore, it was the case of the petitioner, as a claimant before the Arbitral Tribunal, that the said Supplementary Agreement dated 25.7.1990 was made due to contingency and the relief claimed is that, since as per the Supplementary Agreement revalidation of MMDA plan was not obtained by the respondents regarding the construction of fourth to tenth floors, the petitioner is entitled to vesting of 29 units comprised in 35,450 sq.ft., including 50% of car parking area, also claiming that the said units must be made fit for use and occupation or direction to be given to the respondents to pay the amount towards the cost of completion of such works in the ground to third floors. In addition to that compensation has been claimed by the petitioner on the basis of deprivation of the right to construct fourth to tenth floors, apart from claiming interest for all the said amounts payable. 13. On the other hand, it was squarely the case of respondents 1 and 2 before the Arbitral Tribunal that the petitioner has paid only the first amount of Rs.14,00,000/- and no further amount was paid. However, the Arbitral tribunal, based on Ex.C3, viz., memorandum of consideration entered into between the parties, and taking note of the fact that respondents 1 and 2 have not filed any books of accounts relating to the transactions, has decided that the second amount of Rs.90,11,070/- has also been paid by the petitioner to respondents 1 and 2. Therefore, on fact, it was found that apart from an amount of Rs.14,00,000/- paid by the petitioner as per Ex.C2, viz., the Development Agreement dated 17.3.1988, the petitioner has paid another amount of Rs.90,11,070/- under Ex.C3, thus making a total payment of Rs.1,04,11,070/- and in the absence of any challenge on the side of respondents 1 and 2 in respect of the said two payments, it has to be taken that the finding of fact by the Arbitral Tribunal regarding payment of the said amount remains uncontroverted. 14. It has been the further case of respondents 1 and 2 before the Arbitral Tribunal that, after the sanction was withdrawn by the Government based on the MMDA notification in respect of the construction from fourth to tenth floors, the petitioner has abandoned the contract since any such construction would be liable to be demolished and therefore, respondents 1 and 2 themselves have undertaken at their own risk to finish the remaining portion of ground to third floors, apart