At, High Court of Delhi
By, THE HONOURABLE MR. JUSTICE NAVIN CHAWLA
For the Petitioner: Jayant K. Mehta, Saurabh D. Karan Singh, Advocates. For the Respondents: R1, Manish Sharma, Kirish Gandhi, Ninad Dogra, R3, Ashish Dholakia, Kishore Kumar, Advocates.
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) has been filed by the petitioner challenging the Arbitral Award dated 19.2.2018 passed by the Sole Arbitrator adjudicating the disputes that have arisen between the parties in relation to the Management and Lease Deed dated 14.9.2015 executed between the parties.
2. The learned Counsel for the petitioner confines his challenge to a very limited aspect. He submits that the Arbitrator having held that specific performance of this Agreement cannot be granted and proper relief of respondent No. 1 shall be in form of damages, has proceeded to grant damages in favour of respondent No. 1 without there being any evidence for substantiating the same on record. He has drawn my attention to paragraphs 39, 40 and 43 of the Award which are reproduced herein below:
“39. In light of my findings given above I now deal with the claims and counter claims.
Claim No. 1. Seeks quashment of letter dated 3.3.2016 terminating the lease deed being illegal and void being in violation of the terms of the registered lease deed.
Claim No. 2. Seeks declaration that the lease deed dated 14.9.2015 is validly executed and is subsisting and the claimant is entitled to have free ingress and egress to the leased out area at all times.
In these claims I hold that the MLD in question remains valid and binding on the parties and unilateral cancellation of the said deed by R1CO is illegal and non est.
40. The relief sought by the claimant to have ingress and egress to the property subject matter of the MLD virtually seeks specific performance of the lease. I have carefully examined the matter and various grounds taken by the respondents in showing the deed to be void ab intio or in any case voidable and I hold this is not a fit case for grant of relief of specific performance as granting damages, it being a commercial deal, would be proper relief to the claimant.
43. Claim No. 6. Seeks award of damages.
The claimant has claimed that it would have been able to sub lease the property at the rate of Rs. 85 per sq. ft. in case it had not been deprived of access to the property by R1CO.
There is no evidence available on the record from which one could determine the quantum of damages but keeping in view that the lease was for 20 years I consider that a lump sum amount of damages should be Rs. 10/- Per sq. ft. per month for ten years only as it is not possible to hold that the whole property could have been sub leased in one go. The amount comes to Rs. 4,03,59,600/-.
Claim No. 7. Award of interest pendent lite and future interest at the rate of 18% pa
As the claim for damages is being settled now so there is no reason to award any pendentelite interest.”
3. He places reliance on the judgment of this Court in Fitness First India Private Limited (‘FFIPL”) v. Ambience Developers and Infrastructure Private Limited, 2019 SCC OnLine Del. 6794 and of the Supreme Court in Kailash NathAssociates v. DDA &Anr., 216 (2015) DLT 433 (SC)=I (2015) SLT 344=(2015) 4 SCC 136, to submit that for award of claim of damages, it was incumbent on respondent No. 1 to have led evidence to substantiate the said claim. He further places reliance on the judgment of the Supreme Court in Associate Builders v. DDA, 215 (2014) DLT 204 (SC)=X (2014) SLT 73=(2015) 3 SCC 49 to contend that the Award being unreasoned as far as quantification of damages is concerned, the same is liable to be set aside.
4. On the other hand, the learned Counsel for respondent No. 1 submits that respondent No. 1 claimed damages at the rate of Rs. 85 per sq. ft. During the pendency of the arbitration proceedings, on an appeal filed by respondent No. 1 before this Court, being ARB. A. (COMM) 45/2016 titled Total Properties Maintenance LLP v. S.S. Con. Build (P) Ltd. &Ors., the petitioner, as recorded in order dated 14.3.2017 passed in the said appeal, itself had offered to deposit a sum of Rs. 120 per sq.ft. in order to secure the interest of respondent No. 1. He further submits that in the Counter Claim filed by the petitioner, the petitioner had claimed an amount of Rs. 29.60 lakhs per month as damages. Keeping in view the above two figures, the Arbitrator cannot be held to have acted unreasonably in awarding damages only at the rate of Rs. 10 per sq. ft.
5. I have considered the submissions made by the learned Counsels for the parties. A reading of paragraph 43 of the Award clearly shows that there was no evidence led by respondent No. 1 in support of its claim for damages. In absence of any evidence being led, it is not discernible from the Award as to how the Arbitrator has arrived at the figure of Rs. 10 per sq. ft. as damages awarded in favour of respondent No. 1. The offer of Rs. 120 per sq. ft. as recorded to have been made in order dated 14.3.2017 is stated to be made without prejudice and subject to the outcome of the arbitration proceedings. In any case, it was for the Arbitrator to have considered the same and if felt relevant, awarded damages on basis thereto. From the difference in the two figures, that is Rs. 120 per sq. ft. (as offered by the petitioner in the said order) and Rs. 10 per sq. ft. (as awarded by the Arbitrator), it is apparent that the Arbitrator has not been influenced by the said offer of the petitioner.
6. As far as the Counter Claim is concerned, the petitioner had based the figure in the Counter Claim on the purported loss of interest on the alleged cost of construction of the portion that had been leased to respondent No. 1 under the Management and Lease Deed. Again that would have no effect on the claim of respondent No. 1.
7. Section 31(3) of the Act obliges the Arbitrator to give reasons for his Award. The Arbitrator cannot act at his whims and fancies in awarding damages. While the Arbitrator, in awarding damages is expected to have some amount of discretion and play in the joints, at the same time, atleast some evidence has to be led by the party claiming such damages before the Arbitrator and the same has to be considered by the Arbitrator while awarding the damages. In the present case, the respondent No. 1 has not led any evidence in support of its claim before the Arbitrator and the Arbitrator has given no reason for awarding such damages in favour of respondent No. 1.
8. I may also note
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the submission of respondent No. 3 who, drawing reference to the Award on claim No. 3 and claim No. 5, submits that the said claims made by respondent No. 1 had been rejected by the Arbitrator. In my view, once the said finding is not under challenge before me either by respondent No. 1 or the petitioner or the respondent No. 3, I need not state anything further on the same. 9. No other arguments have been raised by any of the parties to this present petition. 10. In view of the above, the award of damages as awarded in paragraph 43 and 45 of the Impugned Award in favour of respondent No. 1 is set aside. The petition is allowed in the above terms, with no order as to cost. Petition allowed.