Case Note & Summary
These appeals under Section 37 of the Arbitration and Conciliation Act, 1996 arose from a common judgment and order dated 11 October 2006 passed by a learned Single Judge of the High Court of Judicature at Bombay in Arbitration Petition Nos.114 of 2006 and 119 of 2006. The Single Judge allowed the petitions and set aside an arbitral award dated 21 September 2005. The appellants, original claimants in arbitration, challenged the setting aside. The dispute concerned a Memorandum of Understanding dated 20 July 1994 under which the original respondents agreed to sell their undivided shares in property at Paper Mill Lane, Girgaon Division, Mumbai, bearing City Survey Nos.1596 and 1597, admeasuring 370 square meters, for a consideration of Rs.18,00,000 payable equally. The MoU contemplated utilization of entire FSI and execution of conveyance or perpetual lease. On the same date, a General Power of Attorney was executed. Between 1994 and 1996, the appellants paid Rs.7,50,000. In January 1996, negotiations with tenants began. On 4 November 1996, original respondent No.1 terminated the MoU alleging non-payment of second installment and other breaches. The appellants disputed termination and referred the dispute to arbitration by letter dated 1 July 1997 to arbitrator R.C. Sampat. Claim was filed and served in November 1997; respondent No.1 filed written statement and counterclaim for Rs.30,00,000 for mental agony. The arbitrator passed an award on 1 April 1998 in favor of the appellants, but the High Court set it aside on 28 September 1998 for want of notice of closure of proceedings. Proceedings restarted; objections to arbitrator's bias were rejected; parties led evidence; and arbitrator delivered award on 21 September 2005, holding the MoU binding, rejecting counterclaim, ordering handover of documents, compliance with MoU obligations, obtaining building plan sanctions, and directing payment of balance consideration and possession. Respondents challenged this award in two arbitration petitions. The Single Judge allowed both petitions and set aside the award by order dated 11 October 2006, leading to these appeals. In the appeals, appellants argued that the Single Judge exceeded jurisdiction under Section 34, acted as appellate authority, misread the contract, and erroneously held that there was no concluded contract. They contended that the MoU described the property, stated consideration, and provided for sale, thus capable of specific performance; no need to specify whether building was to be demolished or floors added. They relied on Kollipara Sriramulu v. T. Aswathanarayan. The excerpt does not include respondents' arguments, the court's analysis, or the final decision.
Headnote
A) Arbitration - Scope of Interference under Section 34 - Court cannot act as appellate authority - Arbitration and Conciliation Act, 1996, Section 34 - Appellants contended that the learned Single Judge exceeded the jurisdiction conferred under Section 34 by interfering with the arbitral award as an appellate authority; the Single Judge allegedly misread the contract and erroneously held there was no concluded contract; the appeal challenged the order setting aside the award dated 21 September 2005 (Para 6).
B) Contract Law - Specific Performance - Concluded Contract - Indian Contract Act, 1872 (principles applied) - The MoU described the property, agreed consideration of Rs.18,00,000, and contemplated execution of conveyance or perpetual lease; therefore it was capable of specific performance; no necessity to specify whether the building was to be demolished or floors added; reliance placed on Kollipara Sriramulu vs. T. Aswathanarayan and ors. (1968) 3 SCR 387 (Para 6).
Issue of Consideration
Whether the learned Single Judge exceeded jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 while setting aside the arbitral award; whether the Memorandum of Understanding dated 20 July 1994 constituted a concluded contract capable of specific performance despite not specifying whether the building was to be demolished or reconstructed or only additional floors built
Final Decision
Not mentioned in provided text excerpt
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996 limits interference with arbitral awards
- court cannot act as appellate authority
- contract can be concluded despite absence of details like demolition vs additional floors
- agreement for sale with property description and consideration is capable of specific performance
- General Power of Attorney and MoU can be binding
Case Details
2025 LawText (BOM) (07) 54
Arbitration Appeal No.62 of 2007 with Arbitration Appeal No.63 of 2007
Alok Aradhe, CJ, Sandeep V. Marne, J
Dr. Virendra Tulzapurkar, Mr. Rajiv Narula, Mr. Milind Mane, Mr. Rahul Sarda, Ms. Rajalakshmy Mohandas, Ms. Mukta Chorge, Ms. Nehal Farukh, Mr. Abhijeet Joshi, Mr. Chaitanya R. Kulkarni
Harkisandas Tulsidas Pabari and Manish Harkisandas Pabari
Rajendra Anandrao Acharya (deleted), Sushant Rajendra Acharya (deleted), Nikita Sushant Acharya, Nandkishor Anandrao Acharya (deleted), Alok Nandkishor Acharya, R.C. Sampat (Arbitrator)
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Arbitration appeal under Section 37 of the Arbitration and Conciliation Act, 1996 challenging the order of a Single Judge setting aside an arbitral award
Remedy Sought
Appellants seek to set aside the order dated 11 October 2006 and restore the arbitral award dated 21 September 2005 granting specific performance of the Memorandum of Understanding
Filing Reason
The learned Single Judge allowed Arbitration Petition Nos.114 of 2006 and 119 of 2006 and set aside the award dated 21 September 2005, holding that there was no concluded contract between the parties
Previous Decisions
Award dated 1 April 1998 was set aside by this Court on 28 September 1998 for want of notice of closure of proceedings. The learned Arbitrator delivered a fresh Award on 21 September 2005, which was set aside by the learned Single Judge by order dated 11 October 2006 in Arbitration Petition Nos.114 of 2006 and 119 of 2006.
Issues
Whether the learned Single Judge exceeded jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 while setting aside the arbitral award
Whether the Memorandum of Understanding dated 20 July 1994 constituted a concluded contract capable of specific performance despite not specifying whether the building was to be demolished or reconstructed or only additional floors built
Submissions/Arguments
The learned Single Judge clearly exceeded the jurisdiction conferred under Section 34 of the Arbitration Act while interfering in the Award and acted as an Appellate Authority over the Award of the learned Arbitrator, which is beyond the scope of grounds enumerated for setting aside the Award under Section 34.
The learned Single Judge misread the contract while holding that the parties were not sure whether the entire building was to be demolished or reconstructed or whether only additional floors were to be built; the MoU provided for sale of the property, described the property, agreed consideration, and contemplated execution of Deed of Conveyance or perpetual lease, and therefore the contract was capable of specific performance. There was no necessity of specifying whether the building was to be demolished for reconstruction or mere floors were required to be added.
Ratio Decidendi
Not mentioned in provided text excerpt
Judgment Excerpts
the learned Single Judge has clearly exceeded the jurisdiction conferred under Section 34 of the Arbitration Act while interfering in the Award.
the Memorandum of Understanding dated 20 July 1994 provided for the sale of the property. That various clauses of the Memorandum of Understanding clearly contemplated execution of Deed of Conveyance or a perpetual lease in favour of the Appellants.
there is no concluded contract between the parties ignoring the fact
Procedural History
Memorandum of Understanding dated 20 July 1994 executed between original Respondents and Appellants; General Power of Attorney executed same date; payments of Rs.7,50,000 made between 1994-1996; termination notice dated 4 November 1996 by original Respondent No.1; reply dated 2 December 1996 and rejoinder dated 21 January 1997; arbitration reference by letter dated 1 July 1997 to Arbitrator R.C. Sampat; statement of claim filed October/November 1997 and served on 15 November 1997; written statement and counterclaim filed in November 1997; Award dated 1 April 1998 in favour of Appellants; Arbitration Petition No.225 of 1998 filed; order dated 28 September 1998 set aside Award for want of notice of closure; arbitrator resumed proceedings vide letter dated 31 October 1998; objections to arbitrator on 4 and 7 December 1998 rejected on 18 December 1998; reply to counter-claim filed 28 October 1999; stay application rejected; oral evidence led; Award dated 21 September 2005 passed allowing claim and issuing various directions; Arbitration Petition Nos.114 of 2006 and 119 of 2006 filed; Single Judge allowed both petitions and set aside Award by order dated 11 October 2006; present Arbitration Appeals filed under Section 37 of Arbitration and Conciliation Act, 1996.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34, Section 37
