M.P.Housing Board Vs.
Progressive Writers & Publishers  INSC 572 (20 March 2009)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No. OF 2009 (Arising out of
SLP ( C ) No.15915 of 2006) M.P. Housing Board ...Appellant Versus Progressive
Writers & Publishers ...Respondents
B.SUDERSHAN REDDY, J.
On February 18, 1975
the M.P. Housing Board (for short `the Board') and Progressive Writers and
Publishers, New Delhi (hereinafter called as the `depositor') entered into an
agreement whereunder the Board agreed to construct a building called the 2
`Hitavada Press Complex' on the land admeasuring 33932 sq. ft. situated at
T.T.Nagar, Bhopal. The terms of agreement, inter-alia, provided that the Board
would execute the construction of Hitavada Press Complex and charge 5%
supervision charges of the actual expenditure on the project. The cost of
construction was to be borne by the depositor. The depositor was required to
place funds including supervision charges at the disposal of the Board in
advance as agreed upon.
The work was expected
to be completed within 18-24 months. The possession of the land was handed over
to the Board for the purposes of construction of building. In case of overrun
of expenditure and funds, the revised estimates were to be submitted and the
administrative approval of the depositor was required to be obtained. In the
event of any dispute, the matter was required to be referred to the Secretary,
Government of Madhya Pradesh for decision.
2. The cost of
construction of the building was estimated at Rs. 28 lakhs out of which the
depositor was required to deposit an amount of Rs. 14 lakhs at the outset and
the balance thereafter. The initial amount of Rs.14 lakhs was accordingly
deposited by the depositor with the Board. However, the depositor failed to
deposit the balance amount. In the meanwhile, the Board had paid the amounts
from its own funds in order to complete the construction of the building. The
depositor expressed its desire to retain only that portion of the building
where the printing press was located including mezzanine floor along with two
adjacent halls on the first floor and accordingly made a representation to the
Board. The Board in its turn agreed to the suggestion and thereafter parties
entered into the second building agreement dated May 4, 1977; under which it
was expressly agreed between the parties that the depositor would transfer the
total area of the land and building which was 33932 sq. ft.
4 and the Board
would in turn re-transfer 7437 sq.ft. of land along with hall having Press
portion constructed thereon for which the depositor would pay Rs. 3.50 lakhs to
the Board in 15 equal yearly installments.
The Board agreed to
grant a loan of Rs. 3.50 lakhs repayable with interest against an equitable
mortgage of the Press building and the portion of the land thereon. Out of the
said amount, Rs. 50,000/- was to be paid by the Board to Punjab and Sind Bank
as per the instructions of the depositor. It was also agreed between the
parties that the Board in order to acquire full ownership of the entire complex
shall return the amount of Rs. 14 lakhs and for that purpose the original
documents pledged by the depositor with the Punjab and Sind Bank were to be
redeemed by the Board upon payment of Rs.13.50 lakhs to the Bank.
Upon fulfillment of
the said conditions, the Board was entitled to complete the construction of the
building in its possession and enjoy the same as the full owner.
3. The Board in terms
of the second building agreement had paid the agreed sum to the Bank and
obtained the original title deeds of the part of the plot admeasuring 19319 sq.
ft only. However, the title deeds of the residual area were not handed over to
the Board. The construction was completed by the Board.
4. For whatever be
the reasons, the parties have entered into third building agreement on May 31,
The recitals in the
agreement disclose that certain complications and disputes arose between the
parties after execution of the earlier two agreements resulting in litigation
between the parties which were pending as on the date of third building
agreement. In the third building agreement it is inter-alia stated that
"on the request of the depositor vide their letter of May 1, 1980,
expressing their desire to take the entire Complex building on the following
terms and conditions and to end all litigation for all time to come, to which
6 the Board agrees......" Under the said agreement, the depositor agreed
to pay to the Board the total amount of cost incurred by the Board for
construction of Complex undertaken by it under the first agreement of February
18, 1975, estimated at Rs.73.50 lakhs including architectural fee, capitalised
interest and supervision charges. The depositor was required to pay interest on
the principal amount at the rate of 15% per annum from the date of completion
of construction of the building (i.e. 01.01.1979) upto the date of payment. The
depositor also agreed to repay the entire loan amount of Rs. 3.50 lakhs paid to
it under the second agreement dated May 4, 1977 with interest at the rate of
10= % till the date of repayment.
5. The dispute
centers around the interpretation of Clause 4 of the agreement and it may be
just and necessary to notice the same in its entirety.
" Clause 4: That
the depositor agrees to pay the entire aforesaid amount of cost, loan and
interest on execution of this agreement not later than 31st October, 1980,
failing which 7 this agreement shall be deemed to be cancelled."
The agreement further
provides that as soon as the aforesaid amounts are paid in full, the parties
were required to take follow up action and withdraw all suits and appeals filed
by the parties that were pending in courts and as well as before Property
Administrator, M.P. Housing Board. The Board was required to hand over
possession and the title deeds by duly declaring the depositor as the owner of
the Complex. It was expressly provided that all such provisions of the previous
two agreements which were inconsistent with the third agreement shall be deemed
to be ineffective.
6. It is an admitted
fact that the depositor did not comply with Clause 4 of the third agreement
which required the payments to be made by 31st October, 1980. It is equally an
admitted fact that the depositor made certain representations to the Board that
they 8 were willing to perform their part but were unable to do so for want of
proper accounts and other details from the Board and thus required further time
for payments of the amounts under the third agreement.
correspondence in that regard between the parties went on till 1986.
7. Since the parties
failed in arriving at any agreed settlement, the Board filed Suit No.2A/87
before the court of IInd Additional Judge, Bhopal for permanent injunction
seeking a restraint against the depositor from disturbing their possession of
the land and building and also sought a further restraint order restraining the
depositor from demolishing sheds constructed by the Board. The court granted a
temporary injunction. The depositor filed Misc. First Appeal in the High Court
challenging the order of temporary injunction granted by the trial court. The
High Court vacated the temporary injunction order.
9 The Board
thereafter filed a comprehensive Civil Suit bearing RCS No.8A/90 in the court
of IInd Additional District Judge, Bhopal for declaration, Specific Performance
of the Contract and Permanent Injunction.
The learned trial
court referred the disputes arising out of RCS No. 8A/90 (New No.63-A/94) and
Regular Civil Suit No.2A/87 (New No. 16A/94) to the sole arbitrator Shri
Justice K.K. Dubey (Retired) for determination of disputes. The said cases were
registered before the arbitrator as Reference Case No.1/95 and Reference Case
No.2/95. The arbitrator by his award dated September 23, 1998 granted the
following reliefs :
"1. The board
shall give immediate possession of the building to the society.
This should be done
within a week of the award being made the rule of the Court.
2. The board shall be
entitled to a sum of Rs.37,70,309-87. Half of this amount shall be paid by the
society as soon as the award is declared the rule of the court. The rest of the
amount shall be paid in monthly installments of Rs.2.4 lakhs from the monthly
rental income of the building. If there is any shortfall in the realization of
the rent, it shall be made good by the society.
This amount shall be
receivable by the board by the end of the month. In case of any default, the
board shall be entitled @ 18% per annum capitalized quarterly.
3. There shall be no
interest payable to the board for the interim period, that is, after passing of
this award and the decree of the court making this award the rule of the court.
4. As regards
unrealized rent, the parties shall enter into an agreement to the effect
assigning the rental debt to the board.
5. Both the parties
shall take steps to withdraw all cases against each other before the court and
before other authorities.
6. The relief of
specific performance of the third agreement dated 31-5-80 as prayed by the
society has been allowed subject to the relief under this award."
8. Being aggrieved by
the award passed by the arbitrator, the Board initiated appropriate proceedings
for setting aside the award passed by the arbitrator.
The trial court
confirmed the award passed by the arbitrator against which the Board preferred
appeals under Section 39 of the Arbitration Act, 1940 (for short 11 `the
Act'). The High Court dismissed the appeals preferred by the Board. Hence the
present Special Leave Petition.
9. Leave granted.
10. The present
appeal is directed against the common judgment and order dated July 27, 2006
passed by the High Court of Madhya Pradesh judicature at Jabalpur whereby the
High Court dismissed the appeals of the appellant filed under Section 39 of the
11. Shri L.N. Rao,
learned senior counsel for the appellant submitted that the award of the
arbitrator is vitiated and required to be set aside. The courts below have
committed a grave error in confirming the award passed by the arbitrator. The
arbitrator has committed gross misconduct which is apparent from the face of
the record. The arbitrator disregarded the terms of the 12 contract and passed
his award on events and circumstances which were irrelevant for interpreting
the terms of the contract. The award is based on conjectures and surmises. It
was also submitted that the arbitrator has exceeded his jurisdiction by framing
and deciding issues which were not referred to him by either of the parties
which reflects the predetermined mind of the arbitrator.
12. Shri C.A.
Sundaram, learned senior counsel appearing for the respondent submitted that
the award does not suffer from any infirmities whatsoever requiring the
interference of this Court in exercise of its jurisdiction under Article 136 of
the Constitution of India. Learned senior counsel submitted that both the
courts below concurrently found that the award passed by the arbitrator is just
and reasonable and is not vitiated by any act of misconduct on the part of the
arbitrator. The findings so recorded by the courts below by no stretch of
imagination could be 13 characterised as perverse and that being the position,
there is no scope for any interference with the award.
13. Shorn of all the
details and embellishments, the crucial question that arises for our
consideration is whether the third building agreement dated May 31, 1980 stood
automatically cancelled on account of non- compliance of the terms thereunder
by the depositor and whether the second agreement dated May 4, 1977 stood
automatically revived? In order to resolve the controversy it is just and
necessary to make a detailed analysis of terms and conditions incorporated in
the third building agreement dated May 31, 1980. The intention of the parties
is to be gathered for determining the scope of the agreement. The third
agreement as is evident from the recitals was entered into mainly for the
purpose of arriving at terms for the payment of construction cost and other fees
payable by the depositor to the Board. The depositor agreed to 14 pay to the
Board the total amount of `cost of Complex' incurred by the Board for the
construction pursuant to the first agreement dated February 18, 1975. The
amount was quantified at Rs.73.50 lakhs which included the architectural fees,
capitalised interest and supervision charges etc. The said agreement does not
speak about any transfer of land. There is no doubt that the depositor agreed
to pay the entire amount of cost of construction, loan and interest payable to
the Board on or before October 31, 1980. The question is whether non payment
results in automatic cancellation of the third agreement? The nature and scope
of the said agreement is entirely different from that of the earlier agreements
of 18.02.1975 and 04.05.1977 executed by and between parties.
14. Whether time is
the essence of the agreement dated May 31, 1980 :
It is true that
Clause 4 of the third agreement provides that the depositor to make all the
payments on or 15 before October 31, 1980 on the pain of cancellation of
agreement. But the question is what are those amounts that were required to be
15. The arbitrator in
this regard upon consideration of the material available on record found that
the depositor was under confusion and rightly so as to the amount of actual
cost of construction. It was also found that the amount actually paid to the
architect as his fees and the fees as the Board has included in the cost of
construction was different. The duration of period of construction was also not
clear from the records produced by the Board. Therefore, the depositor was not
in a position to know the capitalised interest. It is an admitted fact that the
Board had been realising rents from the lessees of the building. The same has
not been taken into account and it is under those circumstances the depositor
went on requesting the Board to provide the detailed accounts as regards 16
the actual cost and also details as to the rent collected by the Board in order
to enable them to pay the exact amount to the Board. The arbitrator found that
despite such request the account books were not shown to them and in fact the
account books were not maintained in terms of the first agreement. The
arbitrator found that the Board always assured the depositor that it would
provide the details as required after complete verification as regards the
amounts of cost incurred by the Board for construction of the building. The
arbitrator found that the Board has realised rents from the building which had
not been set off against the amount of Rs.73.50 lakhs shown in the agreement as
cost of construction. The arbitrator after taking the sequence of events and
correspondence between the parties even after 31st October, 1980 into
consideration arrived at a conclusion that the figure of Rs.73.50 lakhs as cost
of construction was tentatively shown in the agreement.
16. The arbitrator
found that the Board had itself waived the time clause and was willing to
accept money from the depositor even after 31st October, 1980 as is evident
from the negotiations which continued between the parties till the year
The arbitrator relied
on documentary evidence made available by the parties in arriving at the
conclusion that in the present case the time is not essence of the agreement.
17. It is fairly well
settled that the time is not normally an essence of any agreement qua immovable
properties and even there was an express covenant of time being an essence, the
overall agreement have to be looked at to determine whether the time was the
essence. Whether the time is the essence of the contract would, therefore, be a
question of fact to be determined in each case and merely expression of the 18
stipulated time would not make time an essence of the contract. The finding
arrived at by the arbitrator in this regard is not even challenged by the Board
in the proceedings initiated by it under Section 30 of the Act.
18. It is fairly well
settled and needs no restatement that the award of the arbitrator is ordinarily
final and the courts hearing applications under Section 30 the Act do not
exercise any appellate jurisdiction.
evidence by the court is impermissible.
In Ispat Engineering
& Foundry Works, B.S. City, Bokaro vs. Steel Authority of India, B.S. City,
Bokaro [(2001) 6 SCC 347], it is held :
" 4. Needless to
record that there exists a long catena of cases through which the law seems to
be rather well settled that the reappraisal of evidence by the court is not
permissible. This Court in one of its latest decisions [Arosan Enterprises Ltd.
v. Union of India (1999) 9 SCC 449] upon consideration of decisions in Champsey
Bhara & Co. v. Jivraj Balloo Spg. & Wvg. Co. Ltd. [AIR 1923 PC 66],
Union of India v. Bungo Steel Furniture (P) Ltd.[ (1967 1 SCR 324], N.
Chellappan v. Secy., Kerala SEB [(1975) 1 SCC 289], Sudarsan Trading Co. v.
Govt. of Kerala [(1989) 2 SCC 38], State of Rajasthan v. Puri Construction Co.
[(1994) 6 SCC 485] as
also in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan [(1999) 5 SCC
651] has 19 stated that reappraisal of evidence by the court is not
permissible and as a matter of fact, exercise of power to reappraise the
evidence is unknown to a proceeding under Section 30 of the Arbitration Act.
This Court in Arosan Enterprises categorically stated that in the event of
there being no reason in the award, question of interference of the court would
not arise at all. In the event, however, there are reasons, interference would
still be not available unless of course, there exist a total perversity in the
award or the judgment is based on a wrong proposition of law.
This Court went on to
record that in the event, however, two views are possible on a question of law,
the court would not be justified in interfering with the award of the
arbitrator if the view taken recourse to is a possible view.
The observations of
Lord Dunedin in Champsey Bhara stand accepted and adopted by this Court in Bungo
Steel Furniture to the effect that the court had no jurisdiction to investigate
into the merits of the case or to examine the documentary and oral evidence in
the record for the purposes of finding out whether or not the arbitrator has
committed an error of law. The court as a matter of fact, cannot substitute its
own evaluation and come to the conclusion that the arbitrator had acted
contrary to the bargain between the parties."
19. Interpretation of
a contract, it is trite, is a matter for the arbitrator to determine. Even in a
case where the award contained reasons, the interference therewith would still
be not available within the jurisdiction of the court unless, of course, the
reasons are totally perverse or award is based on wrong proposition of law. An
error apparent on the face of 20 the records would not imply closed scrutiny
of the merits of documents and materials on record. "Once it is found that
the view of the arbitrator is a plausible one, the court will refrain itself
from interfering." [see Sudarsan Trading Co. vs. Govt. of Kerala (1989) 2
SCC 38 and State of U.P. vs. Allied Constructions (2003) 7 SCC 396].
20. In the present
case, on the material available and upon appreciating the same the arbitrator
arrived at the finding that the time was not of the essence and the agreement
subsisted even after 31st October, 1980.
The finding cannot be
said to be perverse to give rise to legal misconduct deserving intervention
under Section 30 of the Act.
21. In any event,
even the time was the essence of the agreement, the same was not insisted upon
by the parties in the present case. The material available on 21 record
disclose that even after October, 1980, parties continued negotiations as
regards the actual amounts payable based on what the construction cost would be
on reconciliation of accounts and the same would indicate that the parties were
still working out their rights and obligations under the agreement. The parties
would not have acted in such a manner had the agreement had come to an end. Be
it noted that the Board never took any stand during the negotiations that the
agreement stood cancelled or took any steps to terminate the same. It did not
raise any objection contending that the cost of construction was quantified at
Rs.73.50 lakhs after negotiation and verification of the accounts by the
parities to their satisfaction. It was not the case of the Board that the
quantified amounts towards cost of construction of complex was non negotiable.
It is under those circumstances the arbitrator accepted the case set out by the
depositor that the Board was always assuring them to furnish the 22 correct
figure and the accounts of cost incurred by them but refused to do so. The
arbitrator took into consideration variety of circumstances in arriving at the
conclusion that the figure of Rs.73.50 lakhs stipulated in the agreement was
tentative and not a final figure.
The arbitrator has
fully discussed the issue as to how the non-payment of the amounts was on
account of the Board's action in not furnishing the accounts even at the stage
of arbitration and, therefore, held that the Board could not seek to wriggle
out of 1980 agreement.
22. The courts below
found conclusions drawn and findings arrived at by the arbitrator that non
payment of amounts by the depositor by 31st October, 1980 as provided for did
not result in automatic cancellation of the agreement were plausible and
accordingly refused to interfere in the matter. The courts below upheld the findings
that the depositor continued to be the owner of the property.
23. The decision in
Swarnam Ramachandran and (8) SCC 689], upon which reliance has been placed by
the learned senior counsel, in our considered opinion, in no manner, supports
the contention advanced before us. In the said decision the Court took the view
that the time is presumed not to be of the essence of the contract relating to
immovable property, but it is of the essence in contracts of reconveyance or
renewal of lease. It is further held that whether time is of the essence is a
question of fact and the real test is the intention of the parties. It depends
upon the facts and circumstances of each case. In cases where notice is given
making time of the essence, it is the duty of the court to examine the real
intention of the party giving 24 such notice by looking at the facts and
circumstances of each case. The intention can be ascertained from:
(i) the express words
used in the contract;
(ii) the nature of
the property which forms the subject matter of the contract;
(iii) The nature of
the contract itself; and (iv) The surrounding circumstances.
24. The onus to plead
and prove that time was of the essence of the contract is on the person
alleging it. In the present case, the Board never took the plea before
initiating the legal proceedings that the time was of the essence of the
contract. The arbitrator after taking all the relevant facts into consideration
in the present case found that there was no justification in claiming to treat
time as of the essence of the contract.
25. Mr. Nageshwar
Rao, learned senior counsel for the appellant submitted that amongst the issues
submitted by the parties to the arbitrator there was no issue 25 regarding the
non-execution of the contract or with regard to whether the non-performance of
the third agreement was due to non-supply of accounts by the Board. The
contention was that the arbitrator himself framed a specific issue, being issue
No. 13 to the effect whether the Board thwarted the fulfillment of the
condition of the payment within the period of time by not supplying the proper
accounts of the costs of the building, thus, denying the depositor the
opportunity to deposit the amount. The submission was that the arbitrator
exceeded his jurisdiction in framing such an issue and thus committed grave
legal misconduct. It was submitted that in the present case both the parties
acted in accordance with the terms of the 1980 agreement and upon admitted
failure of the depositor to pay the stipulated amounts within the agreed
period, the contract stood automatically terminated and the 1977 contract
26. We cannot accept
the contention of the Board that no additional issue could have been framed by
the arbitrator on his own for its decision. In a reference made under Section
23, arbitrator's power to determine the lis between the parties is much wider.
The arbitrator has
all the powers which the court itself would have in deciding the issues in the
suit. The court's power to frame an additional issue if its is just and
necessary for deciding the matter in dispute cannot be denied and so also of
the arbitrator where disputes between the parties pending adjudication on suits
have been referred to arbitrator for determination [See: Jugal Kishore
Prabhatilal Sharma and Ors. (1) SCC 114)].
27. In the light of
the settled legal principle, we are of the opinion that the arbitrator was not
bound to adopt 27 only the issues submitted by the parties but was well within
his jurisdiction to frame such other issue or issues as may be just and
necessary for the purpose of disposal of the reference made under Section 23 of
the Act. We accordingly find no merit in the submissions made by the learned
senior counsel that the arbitrator exceeded his jurisdiction and committed
grave legal misconduct in framing said issue and determining the same.
28. It is true that
the arbitrator took judicial note of certain facts which were in the realm and
conjectures and surmises to conclude that the second agreement 1977 was entered
into under political pressure and depositor was compelled to execute the said
agreement under such pressure. But the question is what is the effect of the
same. In our considered opinion even this surmise and conjecture is ignored and
not taken into consideration, the award of the arbitrator continues to be valid
and binding on the 28 parties. The findings recorded by the arbitrator that
the specific performance of the second agreement is barred by limitation; that
the agreement is itself unconscionable; that the agreement ceases to subsist
after the 1980 agreement and was not revived are not based on the sole ground
that the second agreement came to be executed under political pressure. There is
enough material available on record to arrive at such conclusion as the one
arrived at by the arbitrator. All the said conclusions were not arrived solely
on the basis of conjectures and surmises. In Gujarat Water Supply and Sewerage
Board vs. Unique Erectors (Gujarat) (P) Ltd. and Anr. [1989 (1) SCC 532], this
Court held that "an award of an arbitrator should be read reasonably as a
whole to find out the implication and the meaning thereof. Even in a case where
the arbitrator has to state reasons, the sufficiency of the reasons depends
upon the facts and circumstances of the case. The Court, however, does not sit
in appeal over the award and review the reasons. The court can set aside the
award only if it is apparent from the award that there is no evidence to
support the conclusion or if the award is based upon any legal proposition
which is erroneous." The award under challenge is not the one which is
based on no evidence.
(2) SCC 347] this
Court reiterated the principle that an award of an arbitrator can only be
interfered with or set aside or modified within four corners of the procedure
provided by the Act. It is not misconduct on the part of an arbitrator to come
to an erroneous decision, whether error is one of the fact or law, and whether
or not his findings of fact are supported by evidence. In case of errors
apparent on the face of the award it can only be set aside if in the award
there is any proposition of law which is apparent on the face of the award,
namely, in the award itself or any document incorporated in the award. Errors
of law as such are not to be presumed.
30. Learned senior
counsel for the appellant further contended that the arbitrator in the instant
case has committed grave error in going beyond the terms of the contract admittedly
entered into by and between the parties. The question is what is the legal
misconduct committed by the arbitrator in the instant case? Whether the award
by the arbitrator perpetrates gross miscarriage of justice? Is it reduced to
mockery of a fair decision of the lis between the parties to the arbitration?
The erroneous application of law constituting the very basis of the award and
improper and incorrect findings of fact, which without closer and intrinsic
scrutiny, are demonstrable on the face of the materials on record, have been
held as legal misconduct rendering the award as invalid but at the same time
the court could not reappraise the evidences intrinsically with a close
scrutiny for finding out that 31 the conclusion drawn from some facts, by the
arbitrator is according to the understanding of the court, erroneous. Such
exercise of power which can be exercised by an Appellate Court with power to
reverse the finding of fact, is alien to the scope and ambit of challenge of an
award under the Arbitration Act. [See: State of Rajasthan vs. Puri Construction
Co. Ltd. and Anr. [1994 (6) SCC 485]. In the present case there is no erroneous
application of law by the arbitrator or any improper and incorrect finding
which is demonstrable on the face of the material on record.
31. It was submitted
that when there has been quantification of the costs of the construction of the
building and incorporation of the same in the third agreement the same could
not be re-determined by the arbitrator by rewriting the terms of the agreement
entered into between the parties. We find no merit in the submission. There is
no dispute with the proposition that the intention of the parties is to be 32
gathered from the words used in the agreement. If the words are clear, there is
very little that the Court can do about it. In the present case, the parties
entered into three agreements one after the another. The arbitrator while
interpreting clause I of the third building agreement whereunder the figure of
Rs.73.50 lakhs being the amount of cost of complex arrived at the conclusion
that the figure has been given by the Board. The arbitrator upon appreciation
of the material available on record found that the depositor repeatedly
requested the Board to provide the details of accounts of the cost as also the
rent realization in order to enable them to pay the exact amount to the Board.
The arbitrator after
taking all the relevant facts and circumstances into consideration found that
determination as to the actual cost of the construction was absolutely
imperative to determine the exact amount payable and found that the figure of
73.50 lakhs as stated in clause 1 of the third agreement was 33 only
indicative. The arbitrator derived support from the numerous documents filed
before him which revealed that the cost of construction was stipulated in
clause 1 of the agreement was tentative, the matter was kept open till 1990 for
settlement of accounts.
Interpretation of the
terms of the agreement concerning the quantification of cost of construction in
the present case, in our considered opinion, does not amount to rewriting the
terms of the contract.
32. The arbitrator
having considered the overall situation and having arrived at a conclusion that
the second building agreement was not enforceable held that the property would
continue to vest with the depositor. But the arbitrator did not ignore the
legitimate right of the Board to realize the amounts spent by it for putting up
the construction. The arbitrator considered the matter and worked out a
reasonable, just and fair solution and accordingly held that the depositor was
bound to pay the amounts spent 34 by the Board for construction whether or not
they wanted such a construction to have come up or whether or not the Board
could have expended monies to pay for the construction without the consent of
the depositor as provided in the 1975 agreement.
33. The arbitrator
accordingly passed the award declaring that the Board shall be entitled to a
sum of Rs.37,70,309.85 and directed the depositor to pay half of the amount as
soon as award is declared a Rule of the Court. The rest of the amount to be
paid in monthly installments of 2.4 lakhs from the monthly rental income of the
building. In case of any default the Board shall be entitled to interest @ 18%
per annum capitalized quarterly. Relief granted by the arbitrator, in our
considered view is fair and equitable one. The arbitrator awarded the amounts
towards cost of construction plus supervision and other charges payable to the
Board together with a hefty interest @ 15% compound from the date of
expenditure by the Board till the date of payment.
34. In our considered
opinion, there is nothing in the award requiring intervention by the courts.
The courts below rightly refused to interfere with the award passed by the
arbitrator. It is not a case which warrants our interference in exercise of
jurisdiction under Article 136 of the Constitution of India.
35. Appeal fails and
is accordingly dismissed with no order as to costs.
(Lokeshwar Singh Panta)
(B. Sudershan Reddy)
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