PREM KUMAR MENON Vs. LANCOR HOLDINGS LIMITED
LAWS(MAD)-2019-1-680
HIGH COURT OF MADRAS
Decided on January 30,2019

Prem Kumar Menon Appellant
VERSUS
Lancor Holdings Limited Respondents

JUDGEMENT

R.SUBBIAH,J. - (1.) This Original Side Appeal (O.S.A) has been filed against the order dated 23.12.2016 made in O.P.No.231 of 2016 passed by the learned Single Judge, setting aside the arbitral award, dated 16.03.2016 passed by the second respondent in the arbitral dispute between the first respondent and the appellants pursuant to Joint Development Agreement, dated 17.12.2004.
(2.) For the purpose of convenience, the parties are referred to as they are ranked in this O.S.A. Brief facts which are necessary to decide the issue involved in this appeal are as follows: (a) The first respondent-Company (claimant) is engaged in the business of property development and construction. The respondents 1 to 3 in the Original Petition, who are the appellants herein, are brothers. They are absolute owners in possession of land bearing New Door No.165, Old No.110, St.Mary's Road, Alwarpet, Chennai-600 018, comprised in R.S.No.3925/8, 3926/5, 3927/6, Block No.86, Mylapore Division, Mylapore-Triplicane Taluk, Chennai, ad-measuring 20 grounds and 600 Sq.Ft. According to the first respondent-Company, the appellants had represented to the first respondent that they were seeking to develop their property and after several rounds of discussions and negotiations, it was agreed to develop the property jointly. While the appellants could contribute their land, the first respondent-Company would put up construction over the property of the appellants. In consideration of the first respondent- Company to put up construction over the said premises, the appellants agreed to convey 50% undivided share of the land to the first respondent-Company. To this effect, a Joint Development Agreement (JDA), dated 17.12.2004 was entered into between the first respondent-Company and the appellants. (b) As per the JDA, 50% of the undivided share in the subject property was to be conveyed to the first respondent-Company on condition that the first respondent delivers 50% of the constructed area to the appellants after the building is completed in all respects and is certified as being fit for occupation by the Project Architect. The first respondent-Company was to develop the subject property at their own costs. The following are the relevant clauses of the JDA: ".. .. 6. As security for the due performance of LG's obligations under this agreement, LG has this day given a refundable Interest- free deposit of Rs.3,57,00,000/- (Rupees Three Crores Fifty Seven Lakhs only) at the time of signing of this agreement, the receipt whereof by Pay Order in favour of Prem Kumar Menon - Manor Menon Account" for and on behalf of all the LAND-OWNERS, the LAND-OWNERS do hereby admit and acknowledge. LG promises to pay a further refundable interest-free deposit of Rs.25,00,000/- (Rupees Twenty-Five Lakhs only) within 6 months from this day. The said two Security Deposits (hereafter together referred to as "the said Security Deposits") shall be returned without interest to LG by the LAND-OWNERS within 15 (fifteen) days of the fulfilment of all of the following four conditions by LG: a) LG completes the construction of the building in all respects, including the LAND-OWNERS CONSTRUCTED AREA fit for occupation and the Architects for the project certify to the LAND OWNERS that the building has been put up and completed according to the sanctioned plan and is fit for occupation. b) LG has applied to the Chennai Metropolitan Development Authority for Completion Certificate in respect of the said building and c) LG offers, in writing, to hand over the LAND- OWNERS CONSTRUCTED AREA to the LAND- OWNERS, after the conditions stipulated in clause (a) & (b) are fulfilled. The date on which all the above conditions are fulfilled by LG is hereinafter referred to as "the said Handover Date". It is expressly agreed between the parties hereto that, whether or not the LAND-OWNERS have taken delivery of the LAND-OWNERS CONSTRUCTED AREA, upon expiry of a period of 15 (fifteen) days from the said Handover Date, LG will be deemed to have fulfilled their obligation to deliver the LAND-OWNERS CONSRUCTED AREA (whether or not physical possession of the LAND-OWNERS CONSRUCTED AREA has been taken by the LAND OWNERS from LG) and the said Security Deposit would be due and payable by the LAND-OWNERS on such date (i.e. 15 (fifteen) days after the said Handover Date. It is further expressly agreed between the parties hereto that LG will not be required to hand over physical possession of the LAND- OWNERS CONSTRUCTED AREA to the LAND-OWNERS until the said Security Deposit, together with interest, if any, in terms of this Agreement, has been returned by the LAND-OWNER to LG. 7. If the LAND-OWNERS do not repay the said Security Deposit within 15 (fifteen) days from the said Handover Date, the LAND-OWNERS shall pay interest @ 12% per annum on the said Security Deposit from the said Handover Date till the date the said Security Deposit is refunded, together with interest, to LG. 8. In addition to the deposits detailed in Clause 6 above, LG has already paid to the LAND-OWNERS, a Refundable Interest-free Earnest Money Deposit of Rs.1,25,00,000/- (Rupees One Crore Twenty Five Lakhs only), the receipt whereof the LAND OWNERS do hereby admit and acknowledge. The said Earnest Money Deposit shall be returned by the Land Owners to LG within 30 days from the Handover Date. 9. In consideration of LG delivering the said LAND-OWNERS CONSTRUCTED AREA to the LAND-OWNERS per clause 4 supra, the LAND-OWNERS shall transfer/convey to LG or their nominee(s) an undivided 50% share in the Schedule Property (which 50% undivided share is hereinafter referred to as "LG's UNDIVIDED SHARE") in one or more sale deeds, in terms of this Agreement. 10. ... 11.1. It is agreed by and between the parties hereto as follows: (b) LG shall, at their own cost and expenses, undertake and complete the development of the Schedule Property by way of construction of building as per sanctioned plans with internal and external services, amenities, lifts, facilities including but not limited to compound walls, staircases, lobbies, terraces, balconies, passages, covered and uncovered car parking spaces, basement, gardens, machine room, service room, recreational areas etc., and obtain the Completion Certificate from the concerned authorities in respect of such buildings and facilities (hereinafter referred to as "the said development") as hereinafter provided. The construction shall be in accordance with specifications contained in ANNEXURE I. 11.2. If any additional construction is put up on the Schedule Property over and above the sanctioned plan, or because of favourable changes in the building bye-laws, the additional construction so put up shall also be shared in the ratio of 50% for LAND-OWNERS and 50% for LG. The spirit of this agreement being that whatever is built on the Schedule Property shall be shared in the ration of 50% for LAND-OWNERS and 50% for LG. 15.1. The LAND-OWNERS and LG shall take a decision as to whether the Schedule Property should be developed into a commercial or residential complex, within a period of 120 days from this day (hereinafter referred to as "the said Decision Date"). 15.2 .. .. 15.3. a) LG shall obtain the necessary sanctions and permissions from the concerned authorities to undertake the said development (hereinafter referred to as "the said Sanctions") and in the event that the Schedule Property is to be developed into a commercial complex within a period of 12 (twelve) months from the said Decision Date. 15.4. ... 15.5. The LAND-OWNERS shall demolish the structures on the Schedule Property within 45 days from the said Sanctions and LG shall commence construction within 60 days from the said sanctions, subject to the land owners demolishing the structures (hereinafter referred to as, "the said Commencement Date"). 15.6 .. .. 16. LG hereby undertakes to complete the construction of the project in all respects within 24 months from the said Commencement Date. Time shall be the essence of this agreement. 17. Should there be any delay in completion of the project beyond 24 months as aforesaid, LG shall pay to the LAND-OWNERS, for the entire LAND-OWNERS CONSTRUCTED AREA, as compensation: (a) a sum of Rs.8/- per sq.ft. of Super Built-up Area per month in case of residential complex and (b) a sum of Rs.15/- per sq.ft. of Super Built-up Area per month in case of commercial complex. If the completion of the project is delayed beyond the period of 36 months, LG shall pay an incremental penal compensation of 50% for every quarter beyond the 36th month. 18. It is made clear that in case LG fails to complete and hand over the LAND-OWNERS CONSTRUCTED AREA to the LAND- OWNERS within 42 (forty two) months from the said Commencement Date, the LAND-OWNERS shall have the right to take over the project and complete the same at the cost of LG. 21. ... g. The total amount of loans/credit facilities that LG may avail at any point of time, against the security of the title deeds pertaining to the Schedule Property, shall not exceed a sum of Rs.7,50,00,000/- (Rupees Seven Crores and Fifty Lakhs only). 22. LG shall periodically provide to the LAND-OWNERS a progress report, along with photographs showing the progress of the said development and the LAND-OWNERS shall have the right to inspect the progress of the development from time to time with due notice to LG. 23. The LAND-OWNERS shall be entitled to demolish the existing structures on the Schedule Property at their own cost and expenses and to appropriate the proceeds from such demolition. The Demolition approval charges payable to the Corporation of Chennai shall be borne by the LAND-OWNERS. 24. The name of the Building shall have the prefix "MENON". The said prefix shall appear equally prominently along with the rest of the name of the building in all places where the name of the building is displayed. 25. LG shall appoint the Architect for the said development after obtaining the consent of the LAND-OWNERS. Similarly, LG shall obtain the consent of the LAND-OWNERS for the design and plans for the said development. All other decisions with regard to the said development shall be solely taken by LG who shall however keep the LAND-OWNERS informed of the same as well as about the progress of work in the said development. 31. After LG has delivered, or is deemed to have delivered, the LAND-OWNERS CONSTRUCTED AREA to the LAND-OWNERS, LG shall be entitled to get conveyance of LG's UNDIVIDED SHARE in the Schedule Property in its favour or in favour of its nominee/s. 32. After LG take, or cause to be taken, in favour of itself or its nominee/s, the conveyance of LG's UNDIVIDED SHARE in the Schedule Property within 12 months from the said Handover Date. 33. After LG gets conveyed to itself or to its nominees LG's UNDIVIDED SHARE in the Schedule Property, LG shall be entitled to sell or lease or rent or transfer by any other mode/nature or give for any other usage the said LG's CONSTRUCTED AREA or any part or portion thereof to such person or persons or company or entity or body at such price and on such terms that LG may decide at its sole discretion. 36. The LAND-OWNERS will execute and register in favour of LG or its nominee(s) a specific Power of Attorney/S (hereinafter referred to as the FIRST POWER OF ATTORNEY or 1st POA) to carry out the said development and to obtain various approvals, sanctions and permissions relating to the said development and to enter into Agreement to Sell or Agreements to Lease or Mortgage, by way of deposit of title deeds, the LG's CONSTRUCTED AREA and the proportionate LG's UNDIVIDED SHARE in the Schedule Property. 37. The LAND-OWNERS have also this day executed another Power of Attorney (hereinafter referred to as the SECOND POWER OF ATTORNEY or 2nd POA). The said 2nd POA shall be kept in escrow with M/s.HDFC, who will deliver the same to LG on the said Handover Date in accordance with the terms of the Escrow Agreement between the parties as per the draft annexed hereto as Annexure V. The LAND-OWNERS shall also register the aforesaid 2nd POA simultaneously with taking delivery of the LAND-OWNERS CONSTRUCTED AREA. The said 2nd POA shall, inter alia, authorise and empower LG or their nominees to execute and register sale deeds in respect of LG's UNDIVIDED SHARE in the Schedule Property relatable to LG's CONSTRUCTED AREA. It is specifically declared by the LAND-OWNERS that this Power of Attorney shall be irrevocable. The said second Power of Attorney can be acted upon only after LG has delivered, or is deemed to have delivered, the LAND-OWNERS CONSTRUCTED AREA to the LAND-OWNERS. 38. The LAND-OWNERS shall not revoke the Power of Attorney(s), executed as above, provided however there is no breach of the terms contained herein to be performed/observed by LG. 43. If there is a breach or violation of the terms of this Agreement, the aggrieved party shall give written notice to the defaulting party, and such defaulting party shall rectify/remedy such breach within 30 days of receipt of such notice. The LAND- OWNERS will only be entitled to terminate this Agreement in the following situations: (a) Failure of LG in completing the said development within the agreed time. (b) Failure of LG in delivering the LAND-OWNERS CONSTRUCTED AREA within the stipulated time without encumbrances. (c) Permitting the change in ownership of the equity share capital in LG Provided however that the LAND-OWNERS will be entitled to terminate this Agreement only if the LAND- OWNERS have not defaulted in any of their obligations under this Agreement. 44. In the event of this Agreement being terminated in terms of Clause 43 hereinabove, the LAND- OWNERS shall simultaneously with such termination refund to LG the said Security Deposit of Rs.3,82,00,000/- (Rupees Three Crores Eighty Two Lakhs only) paid by LG, after deducting the losses that the LAND-OWNERS may have suffered. 45. .. 46. Any structural defects in the Building, including the LAND-OWNERS CONSTRUCTED AREA shall be repaid by LG at their cost and expense upto a period of one year from the Handover Date. 52. All disputes, differences, claims and questions whatsoever which may arise during the continuance of this Agreement between the parties hereto touching these presents or the construction, meaning, effect or application thereof or any Clause or thing contained in this Agreement or in respect of any account or as to any act of omission of either party or as to any other matter in any way relating to or arising out of or touching this Agreement or the rights, duties and liabilities of either party under this Agreement shall be referred to arbitration in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modifications or enactment thereof for the time being in force, each party nominating an arbitrator of the ranking of a retired High Court Judge residing at Chennai. The two arbitrators so appointed shall confer and nominate an umpire. The arbitration proceedings shall be held at Chennai and courts in Chennai alone shall have the jurisdiction. ....." (c) Initially, the parties were vacillating between the residential building and commercial building and were uncertain of this even at the time of signing the JDA. Hence, the JDA provided a period of 120 days for the parties to decide on the nature of structure to be put up. As per the terms of the JDA, the first respondent-Company, at the first instance, deposited with the appellants a sum of Rs.3.57 Crores towards refundable security deposit. On 29.03.2006, the parties entered into a Supplemental Agreement, whereby they decided to put up a Software Technology Park (STP) in the said property. This agreement was also reduced into writing. Besides this, the appellants executed a Power of Attorney of even date empowering the first respondent-Company to put up construction over the said property, apply for required sanction in this regard, execute agreements for sale for 50% of the said property and also enter into lease agreement pertaining to the first respondent-Company's share. The appellants also executed another Power of Attorney on 29.03.2006 empowering the first respondent-Company to convey 50% undivided share in the land in favour of its nominee or any other person. An Escrow Agreement was entered into on the same day between the first respondent-Company and the appellants and HDFC, Bangalore. Under the terms of the Escrow Agreement, HDFC was appointed as an Escrow Agent having custody of this Power of Attorney and was to act in the interest of both the parties. Under the terms of the Escrow Agreement, HDFC was obligated to hand over to the first respondent-Company the original Power of Attorney dated 29.03.2006 upon receipt of proof from the first respondent- Company that the construction was completed as per the terms of the JDA, which contemplated both delivery and deemed delivery. Further, a sum of Rs.25 lakhs was paid by the first respondent-Company towards further security deposit on 13.01.2005 at the request of the appellants. (d) Another supplemental agreement dated 22.02.2007 was entered into between the parties, whereby the security deposit was enhanced by a further sum of Rs.3 crores and the total sum of Rs.6.82 crores was deposited with the appellants by the first respondent-Company. This amount being security deposit, is refundable by the appellants upon due performance by the first respondent- Company and contemporaneous to handing over vacant possession of their share of the constructed area. (e) Clause 6 of the JDA provided that upon fulfilment of its obligations, the first respondent-Company shall offer to hand over to the appellants the areas constructed by it and such offer shall be made in writing. The date of such offer shall be reckoned as the "hand over date." On their failure to take delivery within 15 days from such date of hand over, it shall be deemed that the first respondent-Company has delivered possession by completing the obligations cast on the first respondent-Company under the JDA. All other provisions of the JDA revolving around the issue of the handing over date, include the possibility of deemed delivery. (f) Changes were also brought about in Clauses 15.1 to 15.6 of the JDA, by incorporating fresh clauses which were numbered as 15.1, 15.2 and 15.3. The details of the areas and the allocation of spaces were reflected in Clause 6.1. As per the said clause, the second, third, fourth and fifth floors were to be allotted to the share of the first respondent-Company, while the sixth, seventh, eighth and ninth floors were allotted to the share of the appellants. The plinth area, common area and the super built up area, of each floor, was equally divided. Insofar as the tenth floor was concerned, the North Wing was allotted to the share of the first respondent-Company, while the South Wing was allotted to the share of the appellants. The terrace area was divided equally among the parties. The car parks, which were to be located in the basement, ground floor and first floor, and the open areas around the building, were also equally divided between the parties. (g) The plan sanction was duly obtained and workers were engaged in different shifts to carry out the construction activities at commendable speed. First quality materials were used by the first respondent-Company being oblivious to the cost involved and elevation was given due importance, as the parties contemplated only a shell inside. The appellants and their representatives were in continuous supervision of the progress of work and actively participated in various discussions. They have also made many suggestions and requests for enhancements to the structure. According to the first respondent-Company, though these fell outside the ambit of the JDA, the first respondent-Company obliged merely to please the appellants. An extent of 1.86 lakhs square feet was erected and in excess of Rs.50 crores was spent on construction and related activities. The building has met the U.S. Green Building Council Norms and Standards and the Certification was under process. The specifications provided in the JDA were outshined and the first respondent-Company delivered much more than what was assured under the JDA. The property has been named "Menon Eternity". (h) Having completed the construction as per the requirements, the first respondent-Company was ready to deliver to the appellants their share of the superstructure, which was sixth, seventh, eighth, ninth and Southern half of the tenth floor. The first respondent-Company was to retain the second, third, fourth, fifth and Northern half of the 10th floor for itself, as per the Supplemental Agreement, dated 29.03.2006. The basement, ground floor and first floor were allocated for car parking. Even while the construction activities were being wound up, the first respondent-Company had identified a tenant for the entire sixth floor of the appellants. The said tenant, M/s.Future Management and Consultancy Private Limited, had inspected the premises in and around August 2008 and after satisfying itself, offered to pay rent of Rs.88/- per Sq.Ft. per month to the appellants. The said tenant also paid little over Rs.2 crores to the appellants towards advance for taking on lease the entire sixth floor of the property. (i) Under Clause 25 of the JDA, the first respondent-Company was entitled to engage a Project Architect and had appointed one M/s.Natraj & Venkat as the Project Architect. The appellants were also aware of the same and even attended various meetings in their office to understand the interior specifications, materials used and understating the construction practices. The Project Architect issued a Certificate, dated 10.10.2008 stating that the building was fit for occupation, upon the Tamil Nadu Electricity Board (TNEB) giving power connection and CMWSSB providing water and sewerage connections to the property. It was specifically mentioned in the said Certificate that the same was being issued by them in the capacity of Project Architect. Similarly, the CMDA, after inspection of the premises and upon being satisfied that the structure has been constructed as per the sanctioned plan, issues a Completion Certificate certifying that the building is ready for occupation. The TNEB and the CMWSSB provide their respective services only after issuance of the Completion Certificate. With regard to the building, the first respondent-Company had applied for the Completion Certificate as early as on 29.07.2008. In fact, the JDA provided two limbs to ascertain fulfilment of obligations by the first respondent- Company, namely, (a) Certificate of Architect, and (b) Application to CMDA for Completion Certificate. Thus, fulfilment of the first respondent-Company's obligations did not include obtaining Completion Certificate from the CMDA, so also the electricity and sewerage Connections. (j) In the meanwhile, there were further meetings and discussions between the first respondent-Company and the appellants. During the said meetings, various issues relating to the property were discussed. The appellants had alleged delay on the part of the first respondent-Company in completing the project. The Service Tax payable in respect of the project was another bone of contention which was discussed in detail. The first respondent-Company also placed on record that during the meetings, it was agreed between the parties that the entire construction was completed by the first respondent-Company and though entitled to exercise rights conferred under the Power of Attorney, the first respondent-Company sought execution of sale deed in their favour by the appellants directly. But the appellants had suggested that they would refund the security deposit only upon the first respondent-Company finding the tenants for the appellants' portion. This was not accepted by the first respondent-Company. It was further specifically stated that the additional works were also under way. However, such works were not within the scope of the JDA and hence, they did not require further discussion. (k) While so, vide letter dated 20.10.2008, the first respondent-Company addressed the appellants informing them that the building was complete and ready and fit for occupation. As contemplated under Clause 6 of the JDA, the Certificate of the Project Architect and a copy of its application to the CMDA for Completion Certificate were enclosed with such documents. The appellants were also called upon to duly refund the security deposit and take possession of their share of the superstructure. It was categorically stated in the said letter that date of delivery shall be reckoned as the handing over date. Out of the entire sum of Rs.6.82 crores of security deposit, a sum of Rs.1 crore had already been refunded by the appellants from and out of the advance paid by the tenant identified by the first respondent-Company. The balance Rs.5.82 crores was demanded from the appellants. This amount was only in respect of the security deposit and other charges and the expenses to be shared by the appellants. (l) While so, to the first respondent-Company's letter dated 20.10.2008, the first appellant, on behalf of all the appellants, addressed a reply, dated 28.10.2008 and through this letter, the appellant(s) refused to consider "20.10.2008" as the handing over date and alleged that the building was not complete in all respects. It was further contended that the Certificate of the Architect was not in accordance with Clause 6 of the JDA, as it is mentioned that the building would be fit for occupation only upon the electricity and sewerage connection being obtained. Basing that as the reason, the appellants contended that the Architect's Certificate could not be treated as certifying completion of the building, as electricity, water and sewerage connections were yet to be obtained. It was further alleged by the appellants that the obligation of the Project Architect extended to obtaining Occupancy Certificate and that the Project Architect was also obliged to certify that the first respondent-Company had submitted all the relevant documents to the CMDA as per the rules and regulations. It is the further case of the appellants that "20.10.2008" could not be deemed as the handing over date and called upon the first respondent- Company to withdraw the letter. However, it was unequivocally admitted by the appellant that they were holding a sum of Rs.5.82 crores re-payable to the first respondent-Company by the appellants. (m) Shocked by the letter of the appellants, dated 28.10.2008, the first respondent-Company addressed a reply, dated 05.11.2008 and it was reiterated that the building was complete in all respects and ready and fit for occupation. While so, by letter dated 13.11.2008, the appellants addressed the Project Architect accusing the Architect of ineptness and lack of interest towards the project. Several rounds of discussions and meetings took place between the appellants and the first respondent-Company, and it became obvious and apparent that the appellants had no intention to return the money re-payable to the first respondent-Company. Besides that, the appellants had also engaged themselves in a private dialogue with the Escrow Agent and several communications were exchanged between the appellants and the HDFC being the Escrow Agent. According to the first respondent-Company, the Escrow Agent, instead of acting as a Trustee of the interest of both the parties, had taken sides with the appellants. In the meanwhile, on 26.11.2008, the first respondent- Company addressed the appellants enclosing a Statement of Accounts showing the amounts due to the first respondent-Company from the appellants. The first respondent-Company had incurred heavy expenses and requested the appellants once again to refund the dues to them. By then, the Completion Certificate was also received from the CMDA. The appellants returned a further sum of Rs.1 crore to the first respondent-Company on 01.12.2008, reducing the balance of security deposit to Rs.4.82 crores. (n) Thereafter, meetings were held between the parties and notices were also exchanged between them. While so, the appellants had moved this Court under Section 9 of the Arbitration and Conciliation Act and filed O.A.Nos.201 and 202 of 2009 and A.Nos.1143 to 1145 of 2009, praying for the following reliefs: (i) interim injunction restraining the first respondent-Company from leasing out any portion of the property belonging to them; (ii) restraining HDFC from releasing the original Power of Attorney; (iii) restraining HDFC not to sanction any loans to the first respondent-Company against security of the rent payable in respect of the portions of the second appellant; (iv) interim injunction restraining the first respondent-Company from interfering with the appellants' rights who have joint possession of the constructed portion of the building, and (v) interim injunction restraining the registration of the balance 5400 Sq.Ft. undivided share in favour of the first respondent-Company. Except A.No.202 of 2009, all the other applications were dismissed on merits by this Court on 21.04.2009 and in respect of A.No.202 of 2009 regarding the joint possession, the first respondent-Company had undertaken not to disturb or interfere with such joint possession and hence, the said application alone stood allowed. According to the first respondent-Company, the appellants had not exercised their right to nominate an Arbitrator and hence, the first respondent- Company moved this Court under Section 11 of the Arbitration and Conciliation Act. In the meantime, the appellants had filed C.S.No.279 of 2009 praying for permanent injunction restraining the Sub-Registrar, Mylapore from registering the sale deed presented by the first respondent-Company in respect of 5400 Sq.Ft. undivided share over the said property; permanent injunction restraining the Sub-Registrar, Mylapore from registering lease deed or document or instrument presented by the first respondent in respect of the second, third, fourth, fifth and half of the tenth floor of the building "Menon Eternity" and for mandatory injunction directing the Sub-Registrar, Mylapore to initiate action against the first respondent-Company and its officials under Section 83 of the Indian Registration Act. The said application was dismissed on merits, and pending the said suit, the appellants had taken out interim applications. (o) The appellants preferred Original Side Appeal (O.S.A) against the order of the learned Single Judge. However, no interim order had been granted in favour of the appellants. The appellants sought for appointment of an Advocate Commissioner to inspect the building which is constructed by the first respondent-Company, pursuant to which, an Advocate Commissioner was appointed, who had inspected the premises in the presence of the representatives of the first respondent-Company and the appellants and also their respective counsels. The Advocate Commissioner filed report mentioning the defects pointed out by the appellants' representative and remained silent on the explanation given by the first respondent-Company's representative. The grouting process that had already been done and the explanation given by the first respondent-Company, were also not noted by the Advocate Commissioner. The Advocate Commissioner, besides the dampness in the basement electrical room, also mentioned in his report about the patch work in the stair-ways and tiles being chiselled in the wash rooms. The Advocate Commissioner had also pointed out certain inconspicuous flaw in the seventh floor of the premises, which the first respondent-Company had duly set right and pursuant to the grouting process, the dampness had also been set right. These defects cannot be cited to hold that the building is not fit for occupation. (p) According to the first respondent-Company, Clause 46 of the JDA provides that they shall rectify the structural defects, if any, in the building. The first respondent-Company shall be obliged to do so for a period of one year from the date of handing over of the possession. It is evident from the said Clause that completion of the building and handing over of the possession of the completed building, was clearly understood to be different from structural defects. The first respondent-Company had specifically undertaken to set right the defects, if any and being the owner of 50% share in the property, the first respondent-Company is equally interested in protecting and maintaining the property in the best possible state and condition. According to the first respondent-Company, as a direct consequence of the appellants' failure to refund the first respondent-Company's security deposit and on their failing to pay the expenses incurred with respect to statutory charges, the first respondent- Company suffered severe loss.
(3.) In the above background, the parties proceeded to have their disputes adjudicated upon by an Arbitrator appointed by this Court. Since the appellants did not appoint their nominee in terms of the arbitration agreement, the first respondent-Company approached this Court by filing a petition under Section 11 of the Arbitration and Conciliation Act, 1996, which was numbered as O.P.No.137 of 2009 and this Court passed an order appointing the first respondent- Company's nominee as an Arbitrator.;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.