Smt. Panna Sunit Khatau & Ors. Vs Dilip Dharamsey Khatau and Ors (2013)
| Citation | 2013 (4) Bom.C.R. 137 |
| Judgment | 12 April, 2013 |
| Court | High Court of Bombay |
| Bench | R. D. Dhanuka, J. |
| Appellant | Smt. Panna Sunit Khatau & Ors. |
| Respondent | Dilip Dharamsey Khatau and Ors |
| Statute | Arbitration Act, 1940 [Repealed] – Sections 20, 30, 33, 34; Indian Contract Act, 1872 – Sections 73, 74; Indian Evidence Act, 1872 – Sections 101, 101, 102, 103, 104 |
Facts:
Smt. Panna Sunit Khatau and Dilip Dharamsey Khatau co owned an immovable property.
In respect to the above mentioned immovable property a Memorandum of Understanding was drafted.
This agreement was drafted between Panna Sunit Khatau and Ors. (CMK Group), who were the petitioners and Dilip Dharamsey Khatau and Ors. (DMK Group), the respondents.
The memorandum stated the conditions and clauses for the division of the immovable property amongst the two parties by metes and bounds.
The petitioners were to receive one-third of the property and the respondents were to receive the remaining two-thirds of the property.
Clause 9 of the MOU stated the division of the property on the basis of floors. The first, fourth and sixth floor should be exclusively provided to the CMK group and the second and third floor should be under possession of the DMK group.
The respondents were willing to pay the amount of 30 lacs to the petitioners in order to gain possession over the second and third floors of the building as it was decided by both parties in the MOU.
By vide of their counsel they sent a letter expressing their intention to pay the amount and take control of the floors, but the petitioner refused to accept the cheque of 30 lacs and vacate the second and third floors of the building.
In order to resolve this dispute an Arbitration officer was appointed, he was empowered to order the parties to act in congruency to the agreement.
The learned arbitrator ordered CMK to vacate the second and third floors of the building and DMK to deposit the draft for 30 lac rupees.
Both the parties complied with these orders.
At the end of the arbitration process the arbitrator announced a non speaking award and declared that the CMK group had committed willful breach of their obligations.
As compensation the Petitioners were directed to pay Rs.31,20,000/- to the respondents at rate of Rs.10,000/- per day till the date of handing over the vacant possession.
The petitioners, being aggrieved, challenged the order of the petitioner in before the High Court.
Issue:
Whether the arbitrator was justified in announcing an award of Rs. 31,20,000 as compensation for breach of the agreement?
Judgment:
While conducting questioning in this case it was discovered by the judge that the respondents were not able to prove any loss that was occurred to them because of the delay in gaining possession of the floors. It was also discovered that the arbitrator had awarded the full compensation of Rs. 10,000 per day, as mentioned in the MOU, without ascertaining the decree of loss of the respondent or reason of breach by the petitioner.
Since the respondent was not able to prove any major loss that had occurred to them during the time they were not provided possession of the floors, full amount of compensation was not justified to be paid by the petitioner.
Hence, it was held that the arbitrator had committed legal misconduct while announcing the compensation award. Therefore, the court had the duty to interfere even if it was a non speaking award which the court is not allowed to question under normal circumstances.
The impugned award by arbitrator was set aside and the case was forwarded to a tribunal for it to pass a fresh decision.
Conclusion:
The award of compensation set by the arbitrator by way of non speaking award was declared obsolete by the court.
No matter if the award passed by the arbitrator is non speaking, it is the duty of the court to take a neutral and protective view for both the parties. This was established by the supreme court in New India Erectors (P) Ltd Vs Oil and Natural Gas commission (1997)11 SCC 75.
References:
https://launch.westlawasia.com/document/I52FA6480A70611E285FC8D1FEBC5D401?fromSearch=true&offset=1
This article is written by Kabir Chhibber of Vivekananda Institute of Professional Studies, an intern at Legal Vidhiya.
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