Validity Of Reference Cannot Be Questioned Once Supreme Court Referred Disputes To Arbitration: Delhi HC
The Delhi High Court has set aside an Order of the Arbitral Tribunal awarding damages of Rs. 15,00,000 in compensation for demolition of construction after observing that once the Supreme Court referred the dispute to arbitration, a party could not question the validity of the reference at present.
A Division Bench of Justice Vibhu Bakhru and Justice Sachin Datta stated “Insofar as the cost awarded by the Arbitral Tribunal is concerned, we find that the respondent had substantially succeeded before the Arbitral Tribunal and therefore, we find no ground to interfere with the award of cost. In view of the above, the impugned award and the impugned order to the extent that the Arbitral Tribunal has allowed the respondent’s Claim no.2 and awarded damages quantified at ₹15,00,000/- plus interest is concerned, the same is set aside.”
Advocate S.S. Jauhar appeared for the Appellant, while Advocate Sanjay Bansal represented the Respondent.
The Respondents claimed possession of the land since 1974 under specific terms, including an agreement in 1991 that outlined conditions for vacating the plot in favour of a multi-storeyed housing project.
The agreement stipulated that in the event of project abandonment, the property would revert to the Respondents. The disputes were referred to arbitration following the intervention of the Supreme Court.
The Arbitral Tribunal held that the property should be returned to the Respondents under Clause 10 of the agreement. It further directed Rs. 15,00,000 compensation for any demolished construction and awarded Rs. 12,69,380 in arbitration costs.
The High Court noted, “In the present case, the respondent had, in fact, instituted the proceedings for reversion of the subject land by filing an execution petition on 19.07.1999 (being Execution Petition No. 191/1999). The respondent’s action was premised on the terms of this Court’s order, which was in turn passed on the basis of the Agreement.”
The Court further noted that the Single Judge dismissed the execution proceedings. The Respondent appealed the said decision before the Division Bench of the Court. The Division Bench noted that the suit instituted by the appellant was disposed of pursuant to a joint application filed under Order XXIII Rule 3 of the CPC.
“Thus, the appellant’s claim that the reference was invalid, is clearly insubstantial. After having persuaded the Supreme Court to refer the disputes to arbitration, it is not open for the appellant to now question the validity of the reference,” the Court remarked.
Consequently, the Court held, “Apparently, the Special Leave Petition was granted and it was converted to civil appeal (being Civil Appeal No.6936/2011). In the said appeal, both the parties jointly requested that the disputes arising from the Agreement be referred to arbitration. The Supreme Court acceded to the said request. Thus, the appellant’s claim that the reference was invalid, is clearly insubstantial. After having persuaded the Supreme Court to refer the disputes to arbitration, it is not open for the appellant to now question the validity of the reference.”
Accordingly, the High Court disposed of the Appeal.
Cause Title: Mohd Amin Deceased Through Lrs v. Mohd Iqbal Deceased Through Lrs (Neutral Citation: 2024:DHC:8912-DB)
Appearance:
Appellant: Advocate S.S. Jauhar
Respondent: Advocates Sanjay Bansal, Pushkar Sood, Swati Bansal, Vaishali Gupta and Ayushi Bansal