FAO (COMM) 38/2026 Page 1 of 22

$~

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment Reserved on: 04.02.2026

Judgment pronounced on: 27.02.2026

Judgment uploaded on: As per digital signature~

+ FAO (COMM) 38/2026, CM APPL. 7629/2026, CM

APPL. 7630/2026, CM APPL. 7631/2026, CM APPL.

7632/2026

Delhi Development Authority ..... Appellant

Versus

Kalwa ..... Respondent

Advocates who appeared in this case

For the Appellant : Mr. Sanjay Vashishtha, Mr. Siddhartha

Goswami, Mr. Aditya Sachdeva and

Ms Geetanjali Reddy, Advocates

For the Respondent : Mr. Sunil Dutt Dixit and Ms Gauri

Dixit, Advocates

CORAM:

HON'BLE MR. JUSTICE DINESH MEHTA

HON'BLE MR. JUSTICE VINOD KUMAR

JUDGMENT

VINOD KUMAR, J.

1. This appeal under Section 37 of the Arbitration and

Conciliation Act, 1996 (hereinafter ‘the Act’) is directed against

a judgment dated 31.10.2025 passed by the learned District

Judge-02, Central District, Tis Hazari, Delhi (in short ‘District

Judge’) in ARBTN A.(Comm.)No.33/2019, vide which he

FAO (COMM) 38/2026 Page 2 of 22

dismissed the objections under Section 34 of the Act filed by the

appellant-DDA under Section 34 of the Act challenging the

Award dated 20.05.2014 adjudicated by the sole Arbitrator. For

the sake of convenience, the appellant would also be referred to

as ‘DDA’ and respondent would also be referred to as

‘Claimant’.

DISPUTE

2. The respondent is engaged in the business of running

parking sites at various places in NCT of Delhi. In a parking

tender process for Truck Parking site at Majnu ka Tila, Timarpur,

Delhi (hereinafter referred to as „the parking site‟), the

appellant-DDA declared the respondent as the highest bidder and

consequently issued an allotment letter bearing No.

F.99/11/2010/LPC/Parking/699 dated 26.03.2010 at a monthly

license fee of Rs.5,11,000/- for a contract period of three years

and directed the respondent to comply with the terms and

conditions in the aforesaid allotment letter. The respondent had

already deposited two months’ license fee as ‘earnest money’ at

the time of submitting tender. He communicated his acceptance

vide letter dated 29.03.2010 and also deposited advance license

fee of three months i.e. Rs.15,33,000/- adjustable only against the

last three months of the contract period as per the terms of the

allotment letter. The abovementioned acceptance letter is

reproduced as below:

FAO (COMM) 38/2026 Page 3 of 22

“To,

Dated 29.03.2010

The Assistant Director,

Delhi Development Authority,

Vikas Sadan, INA,

Delhi.

Subject:-Truck Parking Site Majnu Ka Tila.

Reference:- Your letter no: F 99(11)

2010/LPC/Parking/699

Dated 26.03.2010.

Sir,

With thanks, I am in receipt of your said letter no: F

99(11)2010/LPC/Parking/699 dated 26.03.2010 whereby

you have called upon to fulfill the following requirements.

Please find enclosed the following documents as required

by you in your above acceptance letter as under:-

1. Three months license fee of Rs. 15,33,000/- vide challan

no 6149 dt: 27.03.2010 deposited in SBI, Vikas Sadan,

New Delhi.

2. Acceptance of Terms and Conditions on Non-Judicial

stamp paper of Rs.10/- duly attested by Notary Public

bearing no: 33 AA 567730.

3. License deed on a non judicial stamp paper of Rs.100/-

duly attested by Notary Public for three years bearing no:

К 808327.

4. Four specimen signature duly attested by Gazzetted

officer.

5. Four passport size photograph attested by Gazzelted

officer.

6. P/C of election I-Card duly attested by Gazzetted

Officer.

Sir, after visiting at parking site, I observed that there is

no in and out gate provided at the parking site for smooth

and proper exist and entrance of tine vehicles besides the

parking site is not been categorically demarcated and

fenced. No boundary wall constructed covering the

parking area and because of above reasons the safety of

vehicles parked in the parking area are at high risk and is

an open invitation for the anti-social elements who could

easily steal the vehicle, belongings etc. from the parking

zone.

It is further observed that the substantial area of the

parking are encroached by local shop keepers, Rehri

walas, hawkers who are operating illegally from the

parking sites besides that there is permanent sort of

FAO (COMM) 38/2026 Page 4 of 22

fixtures installed by food vendors, motor mechanics,

repairing works, mistries etc. also covered substantial

portion of the parking area: In addition to above, the

peoples residing in vicinity also occupied by the parking

site and using the parking site unauthorizedly and illegally

without payment for their vehicles and in this way,

approximately more than 40% area of the parking site are

under illegal and unlawful coverage by the unauthorized

persons. I put my bid for the parking site keeping in view

that the size of the area described to me could easily

utilized for parking above 700 and more truck vehicles but

in the present scenario, the available space is not more

than 400-450 vehicles.

In view of the above facts, I humbly request you to get the

entire area vacated from the unauthorized and illegal

occupancy and provide me 100% area allotted and

advertised for parking purposes, so that I could use the

100% area of the parking site.

You're prompt action would be highly appreciated.

Yours sincerely

Kawla

Parking Contractor”

3. The respondent in its aforementioned acceptance letter

requested for removal of all the unauthorised occupancy/

encroachments and other hurdles and for construction of

boundary wall and providing lights and handing over 100%

possession of the parking site. The case of the respondent is that

vide above reproduced letter, he had apprised DDA about the fact

that the parking site could only hold 400-450 trucks, whereas as

per the description provided to him, the parking site could be

easily utilised for 700 and more trucks. The respondent claims

that the parking site was handed over to the respondent on

05.04.2010 with the verbal assurance from the officials of DDA

of removing unauthorised and illegal occupancy so also carrying

out necessary repairs, light facility, raising boundary walls etc.

FAO (COMM) 38/2026 Page 5 of 22

4. Aggrieved by the non-action of DDA in removing of

encroachments etc., the respondent approached Vice Chairman of

DDA via letter dated 30.04.2010 and for the first time requested

appointment of Arbitrator in terms of the Agreement for

adjudication of dispute. Acknowledging the request of the

respondent, the appellant-DDA reverted via letter dated

01.05.2010, which is reproduced as below:

“OFFICE OF THE EXECUTIVE ENGINEER

NORTHERN DIVISION NO.III/DDA OPP: REM DEPT.

GTB NAGAR; DELHI, 9

F. 7 (10) AE (P) / ND-3/DDA/540

DT.1/5/2010

To

Shri Kalwa

Parking Contractor,

808, Karma Bangash

Chandani Mehal

Darya Ganj, Delhi

Sub; Allotment of Parking at Truck Parking, Tiram Pur

Ref: No: Nil dated 6.4.2010

Dear

With reference to your letter dt.4.4.2010, the parawise

reply is as under:-

As per parking area made by Delhi metro Corporation

and handed over to DDA. As per drawing only one No.

gate has been shown for entry and out. As per drawing

there is no, gate has been shown for entry and out. As par

drawing there is no space for out gate. So it is not possible

regarding boundary wall, the parking and could not be

covered with boundary wall because there are lot of shop

on both sides adjoining parking area and vehiclas can

take tum easily you have taken the parking tenders so

safety of vehiclas falls under you.

Regarding encroachment of parking area it has been seen

and found that there is no any encroachment in the

parking area. Some Khomcha people comes in the

FAO (COMM) 38/2026 Page 6 of 22

morning and goes in the evening. You observed that the

people residing in vicinity also occupied by the parking

site but it has been found that their vehicles are in the

service lane and you are also parking the vehiclas in this

s/L area.

The A.E. concerned inspected the site and it has been

found that about 400 nos. vehicls were park in the parking

area No.1 to and other parking No.9, 10, and 11 were

vacant and it has also been found that you are using the

vacant land of DDA on parking in future DDA land may

not be used as parking.

Before you previous parking contractor has not raised any

observations neither he has forced any problems. However

safety of vehicles and to provide the security man for

watch and ward falls under your jurisdiction so DDA with

not be responsible for any theft. However, the tender for

C/o boundary wall and gate has been called and work

will start shortly.

Sd/-

(Executive Engineer

ND-3/DDA”

5. The respondent again wrote letters dated 05.05.2010 and

07.05.2010 reiterating his grievances alleging that he was

suffering a loss of Rs.12000/- per day due to appellant-DDA’s

failure to take remedial steps.

6. Meanwhile appellant-DDA invited fresh tender by means

of advertisement dated 27.02.2011 in respect of the parking site

in the mid of tenure with the respondent. Consequently, the

respondent moved to the High Court by filing a petition (O.M.P.

No. 235/2011) under Section 9 of the Act seeking interim relief

to prevent DDA from fresh allotment to third party. Vide order

dated 28.03.2011, learned Single Judge of this Court passed an

interim order directing postponement of the proposed auction of

FAO (COMM) 38/2026 Page 7 of 22

the parking site. Subsequently, by order dated 21.09.2011, the

learned Single Judge extended the said interim protection and

directed that the stay shall continue during the pendency of the

arbitral proceedings or until 04.04.2013, whichever event

occurred earlier so long as Claimant-Kalwa complied with court

direction of payment of monthly fee.

APPOINTMENT OF ARBITRATOR

7. The respondent preferred a petition (Arbitration Petition

No.80/2011) under Section 11 of the Act praying for appointment

of Arbitrator. A coordinate Bench of this court vide order dated

09.08.2011 directed the following:

“Strictly speaking, the respondent is correct in contending

that a petition under Section 11 would not be maintainable

in these circumstances, as the arbitration agreement

contains a named arbitrator. However, the matter does not

rest there. The petitioner invoked the arbitration

agreement as early as in May 2010 by addressing a notice

to the Vice Chairman, DDA, who is the named arbitrator.

Despite the said notice, the arbitrator has failed to enter

upon reference. It is a clear case where the arbitrator has

failed to lect without undue delay, as sufficient time has

gone by. Accordingly, the mandate of the learned

arbitrator stands terminated.

The present petition ought to have been styled as one

under Section 14 and 15 of the Act. However, in the facts

and circumstances of the case, I am inclined to treat the

present petition as one filed under Section 14 and 15 of

the Act. It is clear that disputes have indeed arisen

between the parties which are live and are to be resolved

through arbitration.

In view of the aforesaid facts and circumstances, I allow

the petition and appoint Mr. A.P.S. Gambhir, Advocate

(Mobile No.9999983935) as the sole arbitrator to

adjudicate all the claims and counter claims of the parties.

The fee of the learned arbitrator shall be paid in

accordance with the schedule of fee prescribed under the

FAO (COMM) 38/2026 Page 8 of 22

rules of the Delhi High Court Arbitration Centre.

Petition stands disposed”

In view of his order, the arbitration proceedings with the

appointed arbitrator commenced.

STATEMENT OF CLAIM

8. On the basis of facts already narrated, the respondent-

claimant raised the following claims before the Arbitrator:

A. Refund of license fee paid in excess

from 05.04.2010 to till date @ 40% as

the area is not operational and lying

under encroachments and obstructions

etc.

Rs.38,01,840/-

B. Compensation towards operational loss

@ Rs.12,000/- per day

Rs.61,56,000/-

C. Reimbursement of expenses incurred by

the claimant on creation of infrastructure

for running the parking site for the

agreed period of three years

Rs.1,00,000/-

D. Compensation for the mental

torture/agony and physical harassment

suffered by the claimant due to the

inaction of the respondent on his

bonafide requests.

Rs.1,00,000/-

E. Litigation expenses incurred and to be

incurred

Rs.1,00,000/-

F. Refund of Security deposit amount and

advance amount towards license fee

lying in deposit

Rs.10,22,000/-

G. Pendente lite and future interest @ 18%

per annum on the claimed amount from

the date of filing of the arbitration

petition till the realization of the claim

-

FAO (COMM) 38/2026 Page 9 of 22

TOTAL Rs.1,12,79,840/-

STATEMENT OF DEFENCE

9. The DDA, in its Statement of Defence, averred that

possession of the site had been handed over to the claimant–

Kalwa on 05.04.2010 on an ‘as is where is’ basis as per Clause

17 of the agreement. It was thus contended that the claimant–

Kalwa was presumed to be aware of the condition of the parking

site for trucks as per the said clause. It was stated that

once possession was handed over to the Claimant–Kalwa, no

cause or dispute survived for appointment of an arbitrator under

Clause 24 of the agreement.

10. The DDA denied that its letter dated 01.05.2010 amounted

to any admission of problems at the parking site and asserted, on

the contrary, that there was no encroachment on the site, which

was lying vacant. It was further contended that it was the

responsibility of the claimant–Kalwa to check and safeguard

against the menace of theft before commencement of business

and that the DDA could not be held liable for the same.

ARBITRAL PROCEEDINGS AND THE AWARD

11. The Arbitrator after considering the pleadings of the

parties framed the following issues:

“Whether the claimant is entitled to:

FAO (COMM) 38/2026 Page 10 of 22

(i) Refund of excess license fee being Rs.38,01,840/-;

(ii) Compensation towards operational loss being

Rs.61,56,000/-;

(iii) Reimbursement of expenses incurred on creation of

infrastructure by the claimants being Rs.1,00,000/-;

(iv) Compensation for mental torture/agony and

physical harassment suffered by the claimant being

Rs. 1,00,000/-;

(v) Litigation expenses incurred by the claimant being

Rs.1,00,000/-;

(vi) Refund of security deposit being Rs.10,22,000/-;

(vii) Pendente-lite and future interest @18% on the

aforesaid claim;

(viii) Relief.”

12. The parties led their respective evidences before the

Arbitrator. After hearing the parties, the Arbitrator concluded that

photographic evidence showed the true circumstances of the

property site. Exhibit CW-1/19 (which contained 159

photographs of the situation at the parking site) and testimonies

of the witnesses proved the case of the Claimant regarding

encroachments on the site. Additionally, a conjoint reading of the

letters dated 01.05.2010 and 03.05.2010 proved that the DDA

was convinced that there were encroachments on the parking site

and had also promised to construct boundary wall and a gate at

parking site for the proper utilisation of the area of the parking

site. The learned Sole Arbitrator, upon appreciation of the

pleadings and evidence on record, held that owing to substantial

encroachment upon the parking site, the claimant was unable to

utilize the full capacity of the parking area. It was accordingly

held that the claimant was entitled to a proportionate refund of

licence fee. The Arbitrator determined that licence fee had been

FAO (COMM) 38/2026 Page 11 of 22

paid for a period of 18 months, i.e., from 05.04.2010 to

05.10.2011, amounting to Rs. 95,04,600/- and awarded 40

percent thereof, i.e., Rs. 38,01,840/-. The claim towards

operational loss was also partly allowed, awarding a sum of Rs.

32,88,000/-. Additionally, the Arbitrator awarded litigation

expenses of Rs.60,000/- and directed refund of the security

deposit of Rs.10,22,000/-. The awarded amounts were directed to

carry pendente lite and future interest at 9 percent per annum

from the date of filing of the claim petition until realization.

13. The arbitrator also delved into the issue of interpretation of

‘as is where is’ clause, as encapsulated in clause 17 of the

agreement. It would be apposite to reproduce his opinion as

under:

“Though the learned counsel for the respondent

emphasised that the site was allotted on „as is where is‟

basis and also cited the judgments (supra) in favour of his

submissions. But the judgments cited by the learned

counsel for the respondent are distinguishable on facts.

First of all, the claimant was only a licencee with very

limited right to slow the parking of vehicles while in the

judgment cited, the respondent therein was a lessee of the

land having wider rights. Since, as a lessee could

approach different govt. departments for redressal of his

grievances like provisions for parking. lights, water,

sewage, roads etc. Moreover, parking, lights, water,

sewage, road etc. are additional facilities for the plot of

the respondent while the plot itself is intact. In the present

case, the biggest problem faced by the licencee (claimant)

was that the parking site allotted to him was not intact.

Even if, additional facilities were not provided was not a

question of much consequence in the present case.

Moreover, the respondent-DDA in the present case had

promised to construct a boundary wall and a gate and had

also promised to remove the encroachment as the conjoint

FAO (COMM) 38/2026 Page 12 of 22

reading of its letters dated 01.05.2010 and 03.05.2010

(Exhibit CW-1/8 & CW1/43) reveals. Therefore, the

judgment cited by the learned counsel for respondent do

not serve the desired purpose.”

14. The Arbitrator awarded the following relief as under:

(i) Refund of Licence fee paid in

excess

Rs. 38,01,840/-

(ii) Compensation for Operation Loss Rs. 32,88,000/-

(iii) Litigation Expense Rs. 60,000/-

(iv) Refund of Security Deposit

Amount

Rs. 10,22,000/-

Total: Rs. 81,71,840/-

The Arbitrator also awarded pendente lite and future interest at

the rate of 9 percent per annum on the aforesaid awarded amount

from the date of filing arbitration petition i.e. 03.11.2011 till

realization of the said amount.

IMPUGNED JUDGMENT

15. The DDA challenged the said award before learned

District Judge by filing objections under Section 34 of the Act.

While first dealing with the scope of Section 34 of the act, the

learned District Judge reiterated the settled position of law that

courts are not permitted to re-appreciate evidence or review

arbitral award on merits as the scope of judicial interference is

FAO (COMM) 38/2026 Page 13 of 22

narrow and confined to the grounds as illustrated in section

34(2) and 34(2A), which include jurisdictional errors, violation

of public policy, patent illegality apparent on the face of the

award, or perversity of such nature as to shock the conscience of

the Court. It was further opined that errors of fact, the existence

of alternative or possible interpretations, or mere dissatisfaction

with the reasoning adopted by the arbitral tribunal do not

constitute valid grounds for interference under Section 34 of the

Act.

16. On the issue of encroachment, the court found that there

were substantial encroachments upon the parking site. Learned

District Judge agreed with the Arbitrator on the issue of

encroachment and noted that the Respondent-Kalwa had also

placed photographs of the parking site on record. A letter dated

01.05.2010 by the appellant DDA was taken as admission of

encroachment and of promise by DDA that work for construction

of the wall would commence shortly. The Court noted that

the Appellant-DDA did not lead any evidence before the

arbitrator to rebut these facts. Consequently, the arbitrator’s

findings were held to be based on evidence, which could not be

characterised as perverse or arbitrary.

17. However, learned District Judge was quite cryptic while

dealing with the issue of ‘as is where is’ clause. Relevant portion

of impugned judgment is reproduced as under:

“37. Not only this, but it has also been contended that the

Ld. Arbitrator effectively changed the terms of the

FAO (COMM) 38/2026 Page 14 of 22

Contract while interpreting it and ordered the refund of

60% of the license fees on the grounds of operation loss

and granted compensation for loss of business. The

respondent was under an obligation to accept the parking

site on an „as is where it is‟ basis”, then so the Ld.

Arbitrator should have not given any compensation to the

respondent for alleged loss or encroachment.

………………………………”

18. After noting the submissions of ‘as is where is’ as raised

by DDA, learned District Judge, instead of dealing it, read the

judgment of Associated Builders vs. DDA (2015) 3 SCC 49 to

emphasize that the arbitrator is the sole judge of the quantity and

quality of evidence. Once it is shown that the arbitrator has

considered the material on record and adopted a reasoned view,

the Court cannot interfere merely because another view is

possible. Accordingly, the petition under Section 34 was

dismissed and the arbitral award was upheld in its entirety.

ANALYSIS OF SUBMISSIONS OF PARTIES IN THIS

APPEAL UNDER SECTION 37

19. Aggrieved by the impugned award and the impugned

judgment, DDA preferred this appeal under Section 37 of the

Act. The primary submission of the Learned counsel for

appellant-DDA is that the license was admittedly granted on ‘as

is where is basis’. Clause 17 of the Agreement expressly

mentions the obligation of the respondent-claimant to have

inspected the site and satisfied himself as to all prevailing

conditions prior to submission of the bid.

FAO (COMM) 38/2026 Page 15 of 22

20. The learned counsel for appellant-DDA further contended

that neither the Notice Inviting Tender (NIT) nor the Agreement

specified any minimum parking capacity or number of vehicles.

The respondent-claimant’s assertion that the site ought to

accommodate approximately 700 vehicles was wholly unilateral

and unsupported by any contractual representation. While

assailing the impugned award, the learned counsel for the

respondent argued that while raising the objections of

encroachment, the respondent-claimant still accepted the

allotment via acceptance letter dated 29.03.2010. Moreover, he

deposited the requisite amounts, executed the Agreement, and

took physical possession of the site on 05.04.2010.

21. The learned counsel for the appellant-DDA submitted that

having done so after inspection and with full knowledge of the

site conditions, the respondent-claimant cannot raise any claim

on the ground of encroachment or capacity of the parking site.

22. Learned Counsel for the appellant argued that the term ‘as

is where is’ means the status of the plot in respect of condition

and amenities of the plot and that the issues of encroachment and

boundary wall, single door entry were not part of terms of the

contract. It was argued that when the respondent had accepted

and taken the possession of the site, it would not matter in what

condition the parking site lay.

FAO (COMM) 38/2026 Page 16 of 22

23. Per contra, it is argued by the learned Counsel for the

respondent that had the respondent got complete vacant plot, he

had no right to complain about condition of such a plot and

therefore any claim of respondent for encroachment, boundary

and lack of amenities like road, water, street light etc. would have

been barred under Clause 17. But here the situation is that DDA

did not deliver completely vacant plot. This is the reason that

while accepting the terms and conditions, the respondent raised

the issue of encroachment with DDA vide letter dated

29.03.2020. It is submitted that infact it was orally assured that

DDA would remove such encroachments and raise boundary wall

and open up one more gate so that the respondent is able to use

the parking site efficiently.

24. It is further argued by learned Counsel for respondent that

Sh. Naresh Maheshwari, employee-Manager of the company, in

his evidence as CW2, has testified to this effect in para 6 of his

evidence affidavit before the Arbitrator where that the claimant

had accepted possession of parking site on verbal assurance of

officials to remove unauthorised and illegal occupation at parking

site. It is submitted that this version is corroborated by letter

dated 01.05.2020 of DDA addressed to respondent, which

reflects that DDA owed a responsibility to remove

encroachments and raise boundary walls. Therefore, it is

submitted that clause 17 ‘as is where is’ basis means that the

status of plot after removing the encroachment. Accordingly the

FAO (COMM) 38/2026 Page 17 of 22

learned Counsel for the respondent supported the impugned

award and the view of the Arbitrator on this issue.

25. We have considered the rival submissions. The only issue

which required our consideration is as to whether the view of the

Arbitrator and the learned District Judge on ‘as is where is’

clause 17 is perverse and suffers from patent illegality.

26. The Supreme Court of India had the opportunity to

consider ‘as is where is basis’ clause in the judgment of K.C.

Ninan vs Kerela State Electricity Board ,

MANU/SC/0604/2023, while observing that:

“138. Thus, the implication of the expression „as is where

is‟ or "as is what is basis" or "as is where is, whatever

there is and without recourse basis" is not limited to the

physical condition of the property, but extends to the

condition of the title of the property and the extent and

state of whatever claims, rights and dues affect the

property, unless stated otherwise in the contract. The

implication of the expression is that every intending bidder

is put on notice that the seller does not undertake any

responsibility to procure permission in respect of the

property offered for sale or any liability for the payment of

dues, like water/service charges, electricity dues for power

connection and taxes of the local authorities, among

others.

xxxxxxx

141. To conclude, all prospective auction purchasers are

put on notice of the liability to pay the pending dues when

an appropriate „as is where is‟ clause is incorporated in

the auction sale agreement. It is for the intending auction

purchaser to satisfy themselves in all respects about

circumstances such as title, encumbrances and pending

statutory dues in respect of the property they propose to

FAO (COMM) 38/2026 Page 18 of 22

purchase. In a public auction sale, auction purchasers

have the opportunity to inspect the premises and ascertain

the facilities available, including whether electricity is

supplied to the premises. Information about the

disconnection of power is easily discoverable with due

diligence, which puts a prudent auction purchaser on a

reasonable enquiry about the reasons for the

disconnection. When electricity supply to a premises has

been disconnected, it would be impossible for the

purchaser to assert that they were oblivious of the

existence of outstanding electricity dues.

142. In terms of the legal doctrine of caveat emptor, it

becomes the duty of the buyer to exercise due diligence. A

seller is not under an obligation to disclose patent defects

of which a buyer has actual or constructive notice in terms

of Section 3 of the Transfer of Property Act, 1882.

However, in terms of Section 55(1)(a), in the absence of a

contract to the contrary, the seller is under an obligation

to disclose material defects in the property or in the

seller‟s title thereto of which he is aware and which a

buyer could not with ordinary care discover for himself.

143. While examining the effect of an „as is where is‟

clause, the facts and circumstances of each case

individually, along with the terminology of the clauses

governing the auction sales must be taken into

consideration, to arrive at an equitable decision.”

27. The spirit of the above judgment is that when a tender

process is initiated, the contractor has the opportunity to inspect

the condition of the land/property and only after inspecting it,

they are required to make a bid.

28. We would also like to refer to a judgment of this Court in

S.K. Pandey Vs. MCD and Ors , MANU/DE/0143/2012,

wherein a similar dispute was under consideration. The Parking

FAO (COMM) 38/2026 Page 19 of 22

site was allotted to the tenderer on ‘as is where is’ basis by MCD.

The tenderer alleged that there was 60 percent encroachment on

the total area of parking space allotted to him. It was held that:

“15. The parking site in question in commercial site and

the petitioner accepted the terms and conditions of the

letter of offer. The terms and conditions of the contract

agreement stipulated that the parking site has been given

an “As is where is basis”. Thus, no dispute can be raised

by the petitioner with regard to any loss or damage as the

other was accepted by the petitioner with open eyes”

29. Now let us apply the ratio of the aforesaid judgments to the

facts of this case. For this purpose, we deem it necessary to

reproduce Clause 17 of the Agreement executed between the

parties as under:

“The parking site is being tendered on "As is where is

Basis". It is presumed that the intending tenderer has

inspected the parking site and familiarized himself/herself

with the prevailing conditions in all respect before

submitting the tender. No claim/dispute above

condition/capacity of the parking site shall be entertained

by DDA. The tenderer cannot put any condition with

his/her tender.”

30. This clause itself makes it clear that the intending tenderer

had not only the duty of inspecting the site but also familiarizing

himself/herself with prevailing conditions in all respects. In

this respect we would like to refer to the evidence of CW1

tendered as below:

“Question: There is a condition in the license deed 1(vii),

which states that when you file a tender, before that you

need to inspect that area and then on that basis quote your

bid. So did you do that and inspect the site?

Answer: Yes, I filed the tender only after the inspection of

the site.

FAO (COMM) 38/2026 Page 20 of 22

Question: There is another condition in the licence deed

which is condition no.18 stating that the sites are given in

„as is where is basis‟, it will be handed over in the exact

position, were you aware of such a condition?

Answer: Yes. I was aware of the terms and conditions.”

31. We are fully cognizant of the fact that the courts cannot

appreciate or re-appreciate the evidence. But when the question

of patent illegality and perversity has been raised, the courts are

fully entitled to look into such evidence, of course, without

interpreting and analysing the same. The aforesaid portion of

evidence is enough to show that before tendering the bid, the

respondent was very much aware of encroachments on the

parking site.

32. If the view of the Arbitrator on the ‘as is where is’ clause,

which has already been reproduced, is accepted, it would be

highly prejudicial to those persons who refrained themselves

from raising the bid on seeing the encroachments on the site. The

evidence of respondent to the effect that he was assured by some

officials of DDA and that they would remove the encroachments

cannot be accepted as there is nothing in the contract to that

effect. In the matters of tenders, no oral assurance can be read

into unless it is specifically mentioned in the contract. Such

exercise would seriously and adversely affect the interest of the

contractors who refrained from bidding in the view of existing

condition of the parking site. Had they known of any such

assurance, they could also have considered the option of raising a

FAO (COMM) 38/2026 Page 21 of 22

bid. Such assurance would actually result in change in terms and

conditions of the contract.

33. Such change of conditions of tender, after its acceptance, is

in conflict with public policy of law because it would adversely

prejudice the rights of those who would have made a bid, had

some assurance of removal of encroachments been in their

knowledge. Therefore, the interpretation of ‘as is where is’ clause

by the Arbitrator is absolutely perverse and suffers from patent

illegality. Accordingly, the award of refund of excess license fee

and compensation on account of operation loss against Claims

‘A’ and ‘B’ respectively, which is based upon patently illegal

interpretation of ‘as is where is’ clause, is hereby set aside.

34. The Arbitrator has directed refund of security deposit

amounting to Rs.10,22,000/- against Claim ‘F’. Though the grant

of security deposit has also been challenged, but during

arguments nothing was brought to the notice of this court

showing that the respondent was not entitled to its refund. Hence,

this part of Award is upheld.

35. The appellant has challenged the grant of interest on the

ground that it was awarded without reference to contractual

stipulations or governing principles. Perusal of the statement of

claims shows that respondent made Claim ‘G’ for pendente lite

and future interest at the rate of 18 percent per annum from the

date of filing of arbitration petition i.e. 03.11.2011 till the

realisation. We find that Arbitrator has awarded reasonable

FAO (COMM) 38/2026 Page 22 of 22

interest at the rate of 9 percent from the date of filing of

arbitration petition till realisation. We are of the opinion that

there is no patent illegality or perversity in the same, though such

interest has to be awarded only on the award of security deposit

amount of Rs.10,22,000/- and the litigation fee of Rs.60,000/-

which has now been upheld by this court as above. The issue of

grant of litigation fee as awarded by the Arbitrator against Claim

‘E’ remains unchallenged. We also find no infirmity in the same

being reasonable.

36. Consequently, we hold that the respondent is only entitled

to claim of security deposit of Rs.10,22,000/- as well as litigation

expenses amounting to Rs.60,000/- along with interest at the rate

of 9 percent per annum from 03.11.2011 till realisation.

37. Accordingly, we set aside the impugned award and

impugned judgment to the extent as discussed above.

38. Appeal is accordingly partly allowed.

39. Pending applications stand disposed of.

VINOD KUMAR, J

DINESH MEHTA, J

FEBRUARY 27, 2026

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