Case: JAGJEET SINGH LYALLPURI (DEAD) THROUGH L.RS Vs. M/S UNITOP APARTMENTS AND BUILDERS LTD

very order dated 28.11.2009 the issues for consideration on which the arguments would be addressed was settled and the matter was proceeded on that understanding without raising any objection, the grievance put forth by the respondent and accepted by the learned Single Judge that the learned Arbitrator has not answered each of the claims separately in the award, cannot also be accepted. A perusal of the award would indicate that the learned Arbitrator has adverted to all aspects in a sequential manner and has recorded his conclusion in answer to the contentions that were put forth. 16. One other aspect which has been recorded by the learned Single Judge as the reason for which the matter requires reconsideration by the learned Arbitrator is that the claim put forth by the respondent that the sum of Rs. 1,22,00,000/- spent by them has not been considered by the learned Arbitrator. In that regard the learned Single Judge has held that though the respondent herein would not be entitled to continue the project due to lapse of time the learned Arbitrator has not considered the right of the parties relating to the extent of the cost incurred for the existing construction and the manner in which it is to be dealt with. On this aspect, a perusal of the award passed by the learned Arbitrator would indicate that after having arrived at the conclusion that the respondent has committed the breach, the learned Arbitrator has also adverted to the said contention relating to the cost incurred for the extent of construction made, as claimed and has rejected the same. The consideration as made is as hereunder;"I may examine, at this stage the claimant?s contention that construction worth about Rs. 1 crore 20 lacs has been done on the project. The claimant has primarily relied on the balance sheet of the Company for the relevant year in support of this argument. The balance sheet is Annexure-K at page 118-126 of the statement of Claim. In the schedule forming part of the accounts for the year ending 31 st March, 1999, the balance sheet shows an expenditure of about 1 crore 20 lacs on the project in process. This includes Rs. 44 lacs as advance given to the respondents (land owners) as guarantee money. Expenditure incurred has been shown under various headings such as advertisement and publicity, salary, entertainment, iron and steel, cement, GC sheets, stand, bricks, marble, crusher, electrical, GI pipes, gate, professional charges, telephone expenses, electricity expenses, labour and construction charges. An amount of Rs. 56,58,530/- has been shown under the heading purchase. It is not indicted so as to what was purchased. All the items required for the construction of the project have been shown separately but it is not clear on what purchase/purchase this amount was spent. No explanation is forthcoming from the claimant in this respect. Mr. Mahajan while controverting the argument of Mr. Lekhi has stated that Local Commissioner?s report Annexure-W makes it clear that the amount which may have been spent on the construction was much less. Be that as it may there is no expert evidence on the record to show as to how much money was spent on the construction. The claimant company did receive some money as advance against flats and offices to be constructed. It is in the evidence that Rs. 23 lacs was received by the Company in this respect. The balance sheet as on 31 st March, 1999 at page 121 shows that the Company received Rs. 19,79,488/- as advance against flats and offices. In the absence of reliable evidence on the record, it is not possible to accept the argument of the learned counsel for the claimant.? 17. In that circumstance when the learned Arbitrator has noticed the contention and recorded a finding of fact it cannot be accepted that the learned Arbitrator has not adverted to the same so as to require reconsideration. To be fair to the learned Arbitrator, it has in fact been noticed by the learned Arbitrator relating to the change of Directors and shareholders of the company in 2007 as against the shareholders who existed as on 30.09.2005 and also that the erstwhile Directors/shareholders who had personal knowledge have not been examined by filing their affidavits and even though an application dated 12.09.2009 for summoning them as witnesses was filed, the same was not pressed and the evidence was closed on 28.11.2009 with the consent of the parties. The learned Arbitrator has in fact recorded that none of them have come forward to render assistance in the proceedings. In such circumstance when the respondent herein, who were themselves the claimants before the learned Arbitrator have not conducted the matter in an appropriate manner by securing affidavit evidence of the erstwhile directors / shareholders, they cannot at this stage turn around and contend that the learned Arbitrator has misconducted himself. In any event the challenge to the award does not fall under any of the clauses of Section 34 of Act, 1996. In such circumstance the reliance placed by the learned Single Judge on a decision in the case of ONGC (supra) is highly misplaced. Therefore, the order dated 31.07.2015 passed by the learned Single Judges is not sustainable and the same is liable to be set aside. 18. During the course of hearing we had also made an endeavour to see that the parties amicably settle the matter by enabling the respondent herein to receive some amount towards the expended portion, also by not ignoring the loss suffered by the appellants due to delay. From the photographs produced before us we have noticed that except raising some columns, there is no major construction that is put up. In so far as the expense as claimed by the respondent, as indicated by the learned Arbitrator as extracted above, there is no conclusive evidence to that effect. Though such columns are raised, admittedly construction activity has not taken place beyond March, 1999 and already two decades have elapsed.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]9. In the light of the contentions put forth we have perused the appeal papers and made reference to the material on record. With regard to the agreement dated 14.12.1996 and the clauses contained therein to regulate the parties there is no serious dispute between the parties11. Since the learned Single Judge has presently accepted the contention raised on behalf of the respondent herein that the procedure followed by the learned Arbitrator is contrary to law and has prejudiced the respondent herein since the witnesses were not cross-examined, this aspect of the matter is required to be noticed at the outset. As rightly pointed out by the learned senior counsel for the appellant, the rules of procedure to be followed by an Arbitral Tribunal is flexible and can be agreed upon by the parties as provided under Section 19 of the Act, 199613. From a perusal of the proceedings dated 28.11.2009 it would be clear that both contentions raised by the learned counsel for the respondent herein and which were accepted by the learned Single Judge to ultimately remand the matter, would not be justified. Firstly, in the presence of the parties and their learned counsel it has been recorded that they do not wish to cross-examine any of the witnesses whose affidavits have been filed by the parties concerned and one of the witness who was present was discharged without being cross examined and no grievance was made either by the parties or their learned counsel who were present. It is in that view the evidence was taken as closed on 28.11.2009 and the issues for consideration was settled for arguments on the same day. In that circumstance having consented to the said procedure, it would not be open for the respondent herein to approbate and reprobate so as to raise a different contention at this point. Having accepted the said procedure the respondent is estopped from raising such contention before the learned Single Judge that the arbitrator misconducted himself by not permitting the parties to cross-examine the witness and also that the learned Arbitrator being more than 70 years of age and suffering from knee problem has pressurized the respondent to speed up the matter and the evidence was closed. It is rather intriguing for us to note that such contention has not only been permitted to be raised, but also accepted by the learned Single Judge to remand the matter, which is wholly unjustified14. We are of such opinion for the reason that the procedure to be followed in arbitration proceedings was settled by a separate order dated 28.11.2009 during the course of the proceedings before the learned Arbitrator. Thereafter the award was passed only on 13.01.2010. Though the respondent was represented by their learned counsel and the order dated 28.11.2009 was passed while recording the proceedings of that day, neither any application had been filed before the learned Arbitrator to recall the said order and provide opportunity to tender evidence or cross examine, nor was a challenge raised by initiating any other proceedings, before the award was passed. It is only subsequent to the award being passed such contention is being raised as an afterthought, which in such event cannot be accepted. That apart, the agreement being entered into on 14.12.1996 and the work not having progressed subsequent to March,1999 was not seriously in dispute and in that circumstance based on the affidavit, the admitted documents have been taken note by the learned Arbitrator due to which the non-cross- examination in any event has not prejudiced the respondent herein. One aspect of the matter no doubt was with regard to the claim that was put forth by the appellant herein that a cancellation agreement dated 26.10.2004 was entered into and the security deposit of Rs. 40 Lakhs and the advance of Rs. 23 Lakhs has been re-paid to Mr. S. Surinder Singh which was disputed by the respondent. On that aspect the learned Arbitrator in any event has concluded that the said payment if any cannot be considered as a payment made to the respondent company but has been received by Mr. Surinder Singh who had made gain unto himself. In such event since the respondent has not filed the affidavit of Mr. Surinder Singh disputing the same, it is an inter-se matter to claim from Mr. Surinder Singh and therefore, the non- cross-examination on that aspect also has not resulted in any prejudice. Be that as it may, as already taken note, the procedure to be followed in the arbitral proceedings has been agreed to by the parties. Hence the respondent cannot be heard to complain as and when it suits them15. Further, since through the very order dated 28.11.2009 the issues for consideration on which the arguments would be addressed was settled and the matter was proceeded on that understanding without raising any objection, the grievance put forth by the respondent and accepted by the learned Single Judge that the learned Arbitrator has not answered each of the claims separately in the award, cannot also be accepted. A perusal of the award would indicate that the learned Arbitrator has adverted to all aspects in a sequential manner and has recorded his conclusion in answer to the contentions that were put forth16. One other aspect which has been recorded by the learned Single Judge as the reason for which the matter requires reconsideration by the learned Arbitrator is that the claim put forth by the respondent that the sum of Rs. 1,22,00,000/- spent by them has not been considered by the learned Arbitrator. In that regard the learned Single Judge has held that though the respondent herein would not be entitled to continue the project due to lapse of time the learned Arbitrator has not considered the right of the parties relating to the extent of the cost incurred for the existing construction and the manner in which it is to be dealt with. On this aspect, a perusal of the award passed by the learned Arbitrator would indicate that after having arrived at the conclusion that the respondent has committed the breach, the learned Arbitrator has also adverted to the said contention relating to the cost incurred for the extent of construction made, as claimed and has rejected the same.17. In that circumstance when the learned Arbitrator has noticed the contention and recorded a finding of fact it cannot be accepted that the learned Arbitrator has not adverted to the same so as to require reconsideration. To be fair to the learned Arbitrator, it has in fact been noticed by the learned Arbitrator relating to the change of Directors and shareholders of the company in 2007 as against the shareholders who existed as on 30.09.2005 and also that the erstwhile Directors/shareholders who had personal knowledge have not been examined by filing their affidavits and even though an application dated 12.09.2009 for summoning them as witnesses was filed, the same was not pressed and the evidence was closed on 28.11.2009 with the consent of the parties. The learned Arbitrator has in fact recorded that none of them have come forward to render assistance in the proceedings. In such circumstance when the respondent herein, who were themselves the claimants before the learned Arbitrator have not conducted the matter in an appropriate manner by securing affidavit evidence of the erstwhile directors / shareholders, they cannot at this stage turn around and contend that the learned Arbitrator has misconducted himself. In any event the challenge to the award does not fall under any of the clauses of Section 34 of Act, 1996. In such circumstance the reliance placed by the learned Single Judge on a decision in the case of ONGC (supra) is highly misplaced. Therefore, the order dated 31.07.2015 passed by the learned Single Judges is not sustainable and the same is liable to be set aside18. During the course of hearing we had also made an endeavour to see that the parties amicably settle the matter by enabling the respondent herein to receive some amount towards the expended portion, also by not ignoring the loss suffered by the appellants due to delay. From the photographs produced before us we have noticed that except raising some columns, there is no major construction that is put up. In so far as the expense as claimed by the respondent, as indicated by the learned Arbitrator as extracted above, there is no conclusive evidence to that effect. Though such columns are raised, admittedly construction activity has not taken place beyond March, 1999 and already two decades have elapsed.