TMI Blog2019 (12) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... allenge 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. 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. In view of the breach and the respondent herein failing in the present lis there would be no absolute right in their favour since the inevitable loss suffered by the appellants by not being able to enjoy the property for the last more than two decades also cannot be lost sight. The appellant herein who is the owner of the property will have to enter into a fresh contract and the need and manner of development may not be the same at this point and in such event the appellant herein also would be put to some loss to undertake th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be deposited with the appellant as a guarantee for completion of the project. In that view, the appellants were expected to retain the same if the building is not completed within the period of three years. The sale proceeds from the constructed building was to be shared in the ratio of 48:52 % between the appellants and the respondent. 3. Pursuant to such agreement the respondent secured the sanction of the building plan from the Municipal Corporation on 04.07.1997. The period of three years was to be computed from that point as per the agreement. Hence the construction ought to have been completed by 03.07.2000. According to the appellant, the respondent though commenced the construction during August, 1997, the activity was undertaken until 31.03.1999 and the project was abandoned by them thereafter. Since the construction was not completed by 03.07.2000 and no further progress was made despite the appellant having waited beyond the said period, the appellants got issued a legal notice dated 01.11.2001 and terminated the agreement dated 14.12.1996. The respondent though issued reply dated 28.11.2001 did not proceed further to make progress in the construction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and no determination, in that regard has been made. The said observation was made after holding, though the time was not the essence of the contract but yet the long delay would not be justified. It was held, even in that circumstance the other aspects required consideration. In that background the matter was remanded to the learned Arbitrator for fresh consideration. 6. Mr. Shyam Divan, learned senior counsel for the appellant while assailing such conclusion by the High Court has taken us through the appeal papers and has referred to the agreement dated 14.12.1996 and the clauses governing the parties. It is contended that when a dispute is referred to the learned Arbitrator, Section 19 of the Act, 1996 provides that the Arbitrator can determine the rules of procedure. In that regard it is pointed out that in the hearing held on 28.11.2009 the learned Arbitrator has in the course of the proceedings finalised the procedure and recorded the same in the order. It is pointed out that the respondent was represented by a senior advocate in the arbitration proceedings wherein it has been agreed that the parties would rely upon the affidavits and documents that were filed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parately. It is his case that the learned Arbitrator has proceeded to reject the claim only on the conclusion that time is the essence of the contract. Though the terms as contained in the agreement dated 14.12.1996 is not disputed, the learned counsel contends that the delay caused resulting in noncompletion of the project is solely attributable to the appellant. The appellants had not parted with the title documents relating to the land in question due to which the respondent was not in a position to raise the funds from the bank by creating mortgage. Apart from the security amount the respondent has suffered loss to the extent of ₹ 1,22,00,000/( Rupees One Crore TwentyTwo Lakhs only) being the cost of construction which was put up. Specific claim was raised under different heads before the learned Arbitrator. Despite such contentions and claims being put forth the learned Arbitrator has not considered the same. In that regard it is contended that clause 11 of the agreement which provides relating to the expenditure incurred has not been properly appreciated. The learned counsel contended that the learned Additional District Judge in the proceedings under Section 34 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Arbitrator and the learned Additional District Judge have arrived at a concurrent opinion, it is necessary for us to take note as to whether the learned Single Judge in an appeal filed under Section 37 of the Act, 1996 could have adverted into the merits of the contention beyond the scope available under Section 34 (2) of the Act, 1996 so as to set aside the award and remand the matter. In that regard whether the contentions which were put forth to assail the award by picking holes in the procedure adopted by the learned Arbitrator is to be accepted or not also requires examination, keeping in view the scope of Section 34 (2) of the Act, 1996 and determine as to whether such ground is made out. 11. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... award invalid and to set aside the same exercising the power under Section 34 or in an appeal under Section 37 of the Act, 1996. In this regard as noticed, Section 19 of the Act, 1996 provides that the Arbitral Tribunal is not bound by the Code of Civil Procedure or the Indian Evidence Act. Further, it provides that the parties are free to agree on the procedure to be followed by the Arbitral Tribunal. In this back drop it is noticed that in the case on hand, in the proceedings dated 28.11.2009 (Annexure P15) before the learned Arbitrator, the procedure to be followed has been discussed and recorded, which reads as hereunder; The parties and their learned counsel have been heard. Whatever further pleadings, documents and list of witnesses were to be filed by the parties in terms of the proceedings dated 10.10.2009, have been done. The evidence of the claimant as well as of the respondents was to be recorded today. Mr. Ram Lal, whom the respondents want to cross-examine, is present before the Arbitrator. The learned counsel for the parties have, however, agreed and consented before me they do not wish to cross-examine any of the witnesses whose affidavits have been filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 ₹ 40 Lakhs and the advance of ₹ 23 Lakhs has been repaid to Mr. S. Surinder Singh which was dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I may examine, at this stage the claimant s contention that construction worth about ₹ 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 31st March, 1999, the balance sheet shows an expenditure of about 1 crore 20 lacs on the project in process. This includes ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned 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. In view of the breach and the respondent herein failing in the present lis there would be no absolute right in their favour since the inevitable loss suffered by the appellants by not being able to enjoy the property for the last more than two decades also cannot be lost sight. The appellant herein who is the owner of the property will have to enter into a fresh contract and the need and manner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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