Delhi State Industrial & … Vs M/S Mapsa Tapes Pvt. Ltd.

Author: Mahima, 5th Year student at School of Law, UPES, Dehradun.

Citation: O.M.P (COMM) 489 of 2019

Date of judgment: April 8, 2021

Bench: Vibhu Bakhru

ORiginal copy: View

Issues in question:

• Whether the delay in filing/re-filing of the petition should be condoned?
• Whether it is within the scope of Section 34 of the Arbitration and Conciliation Act, 1996 for an impugned award to be set aside solely because the arbitrator had a different opinion in a similar case?

Background of the case:

• Mapsa purchased a commercial plot, Plot No. 1/07, Sector – 1, Cluster – O (1000 sq.m.) located at Bawana Industrial Area from DSIIDC, a Government of NCT of Delhi undertaking in an open auction for a consideration of ₹6.81 crores out of which ₹1,70,25,000/- was paid on the day of auction itself.
• DSIIDC issued the Letter of Allotment on 13.11.2006 instructing Mapsa to discharge the remaining amount of ₹5,10,75,005 within 90 days of receiving the said letter. Mapsa was also obliged to pay ground rent for the allotted plot in accordance with Clause 7(i) of the General Terms and Conditions of Auction (GTCA) from the date of issuance of the Letter of Allotment.
• Mapsa responded to the Letter of Allotment on 16.01.2007 reminding that DSIIDC was required to attach four copies of Perpetual Lease Deed and a copy of site plan in accordance with the terms of Clause 5(i) of the GTCA. However, DSIIDC didn’t comply with the request even after Mapsa sent a reminder on 22.01.2007. Mapsa paid the remaining 75% balance on 12.02.2007.
• DSIIDC informed Mapsa that finalisation of Lease Deed format requires some time and additional information from Mapsa on 14.02.2007 to which Mapsa complied with on 08.06.2007. Mapsa received the possession of the allotted plot on 19.06.2007 but the execution of the Lease Deed was shelved on the ground that Lease Deed format was still undecided.
• DSIIDC sent the Lease Deed on 31.07.2009 which was duly filed and returned by Mapsa on 07.07.2010 and the Lease Deed was finally registered on 19.10.2010. However, Mapsa highlighted certain inaccuracies in the Lease Deed via letters dated 29.08.2011 and 05.09.2011. Thereafter, it sought a No Objection Certificate (NOC) from DSIIDC for approval of building plans from Municipal Corporation of Delhi. DSIIDC sought payment of ₹2,41,972 on 24.11.2011 as ground rent till 30.11.2011 which was paid under protest by Mapsa.
• Mapsa filed a writ petition for refund of the amount paid as ground rent and that DSIIDC proffer Architectural Control Drawing (ACD). DSIIDC submitted that the format of the Lease Deed was modified by approval of a competent authority resulting in redundancy of submission of ACD. The writ petition was dismissed on 06.05.2015 to which Mapsa filed an appeal which was also dismissed upholding the order of 06.05.2015.
• DSIIDC provided Mapsa with Supplementary Lease Deed on 10.07.2013 and Mapsa forwarded a photocopy of original Lease Deed on 14.07.2013 for preparation of the Supplementary Lease Deed. Later, DSIIDC in a letter dated 16.12.2013 importuned payment of ₹37,12,915/- as ground rent until 31.12.2013 for execution of Supplementary Lease Deed. The sole Arbitrator delivered the impugned award in this case on 12.06.2017.
• Before the Arbitral Tribunal, Mapsa claimed business losses amounting to ₹30,01,34,501 and sought a payment of interest at the rate of 18% on the claimed amount. Mapsa contended that the rent-free period should commence from the date of execution of rectified Lease Deed.
• The Arbitrator agreed with Mapsa’s contention to calculate ground rent payment from the date of execution of the Lease Deed. However, the Arbitral Tribunal denied Mapsa’s claim for compensation for holding back any construction on the plot.
• The Tribunal observed that the agreement did not contemplate liquidated damages to be paid by one party in case of default by the other. It also held that Mapsa is entitled to be compensated for ACD as it pursued DSIIDC for the same with which DSIIDC failed to comply.
• The Tribunal held DSIIDC liable to pay Mapsa an interest of 6% per annum till the signing of the lease on the land cost deposited at the time of auction and at the time of signing the Lease Deed.
• The Tribunal further directed DSIICD to execute the modified Supplementary Lease Deed within a period of thirty months from the date of impugned award and that Mapsa would pay the ground rent from the date of execution of the Supplementary Lease Deed. It also held that any delay in the execution of the award will be excluded from the rent-free period for Mapsa.
• The petition challenging the impugned award was filed on 12.04.2019 when the award was delivered on 24.12.2018. while this was beyond the limitation period of three months, it was within the extended thirty days due to which the delay could have been condoned. But the petition was defective and lacked a Statement of Truth.
• The re-filing was done on 02.08.2019 but via another login ID due to which the Registry of the Court considered it as a fresh petition unaware of the existence of the previous petition. The new petition sought condonation of 129 days.
• The petition dated 02.08.2019 was found to be defective and was re-filed eight times before finally being listed before the Court on 25.11.2019. The petition seeking condonation of delay of 129 days in filing and 76 days in re-filing the petition was dismissed on the ground that the Court was authorized to condone a delay beyond a period of 120 days under Section 34(3) of the Act of 1996.

Contention of the parties:

• The counsel for petitioner challenged the impugned award on the ground that it alters Clause 7 of GTCA which made every bidder/allottee liable to pay the ground rent at the rate of 1% per annum per plot for first five years and after that at an enhanced rate of 2.5% per annum on the originally payable premium.
• DSIIDC further claims the impugned award to be untenable as the Tribunal directs the parties to calculate the amount of ground rent for payment from the date of execution of the Supplementary Lease Deed instead of the Letter of Allotment thereby overriding the terms of the contract.
• The counsel for respondent submitted that the interpretation of the provisions of the contract is constructed by the Arbitrator and until such construction seems obstreperous, the award cannot be challenged under Section 34 and in this case, the interpretation is well-reasoned and empirical.
• The respondent’s counsel further submitted that due to delay on the part of DSIIDC in execution of the sale deed and handing over the possession, the construction was also delayed. For construction purposes, the ACD was also required for approval of building plans from MCD which was never delivered by DSIIDC.

Judgment:

• DSIIDC appealed the above-mentioned order of this Court on the ground that the very first petition for setting aside the impugned award was filed on 12.04.2019 and therefore, it should be considered as the date of initial filing of the petition which was accepted by this Court.
• However, the Court declared the contention of DSIIDC that the delay should be condoned when a government department is party to it as unmerited. It cited Pundlik Jalam Patil v Jalgaon Medium Project where it was held that the objective behind fixing a limitation period was to facilitate swift and prompt justice and in the public interest, State or its beneficiary should remain vigilant so as to not indulge in any act or omission which may result in unsettling the settled legal rights. Therefore, the Court rejected departmental procedures as ‘sufficient cause’ for delay in filing of the petition, declaring the initial delay of 17 days liable to be condoned.
• The Court concluded that there was an inordinate and unreasonable delay in re-filing of defective petition on the basis of affidavits submitted. The counsel for DSIIDC cited Northern Railway v Pioneer Publicity Corporation Pvt Ltd where it was held that re-filing is not discussed within the scope of Section 34(3) of the Act of 1996 and therefore, in this case, the delay in re-filing should be condoned. The Court agreed with the contention but further cited Delhi Development Authority v Durga Construction Co where it was held that condonation of re-filing should be based on material facts of and sufficient cause in each case. The Court, in the present case, rejected the condonation for delay in re-filing.
• The Court also observed that the contention of DSIIDC that the impugned award is against Court’s decision in WP (C) 1831/2020. It also maintained that the scope of Court’s jurisdiction under Section 34 of the Act of 1996 is limited to solely examining if the impugned award is contrary to the fundamentals of Indian law or completely illegal and not encompasses within itself the examination of evidence or review of the award on merits.
• The Court disposed of this petition holding that the impugned award is neither against the fundamentals of Indian law nor illegal.

Analysis:

• In this case, the Court preferred extremely careful perusal for deciding the issue well-within its jurisdiction.
• The Court also applied their judicial minds and relied heavily on the objective behind implementation of the limitation period while concluding the case.