FAO(OS) (COMM) 246/2023 Page 1 of 25

$~

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 27.01.2026

Judgment pronounced on: 16.02.2026

Judgment uploaded on: 16.02.2026

+ FAO(OS) (COMM) 246/2023

M/S MILLENIUM REALTECH PVT. LTD. .....Appellant

Through: Mr. Jugal Bagga, Mr. Sumit

Kaushik, Mr. Charanjit Khatana

& Mr. Chet Ram Kaushik,

Advs .

versus

M/S OPAQUE INFRASTRUCTURE PVT. LTD.

.....Respondent

Through: Mr. Harish Malhotra Senior

Advocate with Mr. Rajender

Agarwal and Mr. Anoop

Kumar, Advs.

CORAM:

HON'BLE MR. JUSTICE ANIL KSHETARPAL

HON'BLE MR. JUSTICE AMIT MAHAJAN

J U D G M E N T

ANIL KSHETARPAL , J.:

1. The present Appeal has been filed assailing the correctness of

the judgment dated 14.08.2023 [hereinafter referred to as „Impugned

Judgment‟], passed by the learned Single Judge [hereinafter referred

to as „LSJ‟], through which the petition filed by the Appellant

(Respondent before the Arbitral Tribunal) under Section 34 of the

Arbitration and Conciliation Act, 1996 [hereinafter referred to as „Act

of 1996‟], challenging the Arbitral Award dated 20.11.2020

[hereinafter referred to as „Impugned Award‟], was dismissed.

FAO(OS) (COMM) 246/2023 Page 2 of 25

2. For the sake of clarity, consistency and ease of reference, the

parties in the present appeal shall be referred to in accordance with

their respective status before the learned Sole Arbitrator [hereinafter

referred to as „LSA‟].

FACTUAL BACKGROUND:

3. In order to comprehend the issues involved in the present case,

the relevant facts in brief are required to be noticed.

4. The present proceedings trace its genesis to the Collaboration

Agreement dated 07.11.2011 [hereinafter referred to as „Agreement‟],

with respect to a land admeasuring 1148 sq. yds. situated in Ishwar

Nagar, Mathura Road, New Delhi [hereinafter referred to as „subject

property‟]. Admittedly, the Respondent (Appellant before this Court)

is the owner of the subject property, and approached the Claimant

(Respondent before this Court), who is in the business of promotion,

development and construction of real estate, to engage it in the

development and construction of the subject property.

5. Under the Agreement, the Claimant was to bear the entire cost

of construction and, in addition, pay a total consideration of Rs. 5.20

crores to the Respondent in stages; Rs. 25 lakhs payable at the time of

execution, with additional Rs. 25 lakhs payable within 30 days of

execution, Rs. 1.50 crores payable upon the Respondent obtaining

sanction of building plans from the competent authority (to be done

within 60 days), and the balance Rs. 3.20 crores were to be paid in

four equal instalments within 120 days of intimation of sanction of the

building plans. In accordance with the terms of the Agreement, the

FAO(OS) (COMM) 246/2023 Page 3 of 25

responsibility to set out the building sanction was to be undertaken by

the Respondent within 60 days from the date of signing of the

Agreement.

6. Further, the Agreement contemplated execution of a registered

Special Power of Attorney by the Respondent in favour of the

Claimant upon sanction of building plans and receipt of Rs. 2 crores,

with a right reserved to the Claimant to rescind the Agreement in case

of default and repossess the property along with refund of the amounts

received.

7. As per the case set out by the Claimant before the LSA, after

payment of Rs. 50 lakhs in terms of the Agreement, the Respondent

failed to take timely steps to obtain sanction of the building plans and

also failed to intimate the Claimant about such sanction, compelling it

to address a communication dated 07.03.2013 enquiring about the

sanction and requesting supply of the original Agreement. It is the

case Claimant‟s case that, for the first time on 22.03.2014, the

Respondent required the Claimant to furnish credentials evidencing its

ability to execute the project, while simultaneously returning a

photocopy of a cheque for Rs. 50 lakhs purporting to refund the

advance.

8. The Respondent, on the other hand, asserted that it had

terminated the Agreement by notice dated 22.03.2014 on account of

the Claimant‟s failure to furnish documents showing its experience

and financial capacity. It was also set out that the cheque of Rs. 50

lakhs issued in favour of the Claimant was deliberately not encashed.

FAO(OS) (COMM) 246/2023 Page 4 of 25

It was further the case of the Respondent that the amount of Rs. 50

lakhs were thereafter deposited with the Registrar General of this

Court pursuant to an order passed in proceedings between the parties,

however it was ultimately withdrawn by the Claimant.

9. It was also pleaded that the Agreement, being unregistered and

having been signed by two directors without a Board resolution amidst

inter se disputes among the directors, which had led to proceedings

before the Company Law Board and an order restraining creation of

third-party interests or execution of collaboration agreements without

consent of all directors, was unenforceable in law.

10. Following the disagreements, the Claimant sent another letter

dated 02.07.2014 to the Respondent, reiterating its readiness and

willingness to perform its obligations under the Agreement, along

with a request for supply of building sanction plans, alternatively, the

Claimant invoked the arbitration clause of the Agreement. In response

to the said letter, the Respondent, by reply dated 14.07.2014, stated

that the sum of Rs. 50 lakhs stood returned pursuant to an arrangement

with one Mr. Taskeen Hussain Siddique, former director of the

Claimant, who also returned the original Agreement and as such no

occasion for appointment of an arbitrator survived. The Claimant

thereupon filed a petition under Section 9 of the Act of 1996, in which

interim orders were passed. Subsequently, a petition under Section

11(6) of the Act of 1996 came to be filed, and LSA was appointed to

adjudicate the disputes.

11. The Claimant, before the LSA, sought specific performance of

FAO(OS) (COMM) 246/2023 Page 5 of 25

the Agreement and, in the alternative, monetary compensation

representing the difference between the value of the subject property

at the time of the Agreement and at the time of the award, together

with refund of Rs. 50 lakhs with interest. The Respondent resisted the

claim, inter alia, contending that specific performance is a

discretionary relief and was barred under Sections 14(b) and (d) of the

Specific Relief Act, 1963 [hereinafter referred to as „Act of 2963‟];

that the Agreement had been validly terminated by notice dated

22.03.2014 on account of the failure of the Complaint to furnish the

requisite credentials; that the amount of Rs. 50 lakhs had been duly

returned, and that the unregistered Agreement was unenforceable in

law.

12. Pertinent to note that during the arbitral proceedings, on

18.09.2017, the LSA recorded that counsel for both parties stated that

the matter stood fully and finally settled. Additionally, it was noted

that the Respondent in its documents also filed a copy of sanction

letter dated 24.01.2013 issued by the South Delhi Municipal

Corporation (SDMC) in respect of the subject property on the basis of

their application dated 26.06.2012, however, the same only came to be

disclosed during the course of arbitration, and no intimation with

respect to the said approval was made to the Claimant. In view of the

continuing disputes amongst the Respondent‟s directors and its

inability to produce a valid Board resolution authorising the

settlement, the LSA declined to pass a consent award and directed the

parties to lead evidence. It is to note that none of the Respondent‟s

directors thereafter challenged the recording of the settlement.

FAO(OS) (COMM) 246/2023 Page 6 of 25

Nevertheless, in the absence of a duly authorised resolution, the

arbitral proceedings continued on merits.

13. By the award dated 20.11.2020, the LSA, upon consideration of

the terms of the Agreement, the conduct of the parties, including the

settlement recorded on 18.09.2017, and the evidence on record,

declined the relief of specific performance on the ground that the

Agreement contemplated performance of a continuous nature not

amenable to supervision. At the same time, the LSA held that the

Agreement was a concluded, valid and enforceable collaboration

agreement and was not compulsorily registrable under Section

17(2)(v) of the Registration Act, 1908.

14. The LSA rejected the Respondent‟s defences relating to alleged

non-supply of financial and experience-related documents, an alleged

prior settlement with Mr. Siddiqui, and the alleged return of the

original Agreement along with payment of sum of Rs. 50 lakhs.

Having regard to the aforesaid, the LSA awarded damages in favour

of the Claimant in the sum of Rs. 1.65 crores, inter alia, having regard

to the conduct of the parties and the amount of settlement recorded on

18.09.2017, along with interest @12% per annum on the awarded sum

from 30.12.2017, the date on which the last payment was to be made

by the Respondent in terms of the aforesaid settlement. Additionally, a

further post-award interest @12% per annum on the total sum of

Award were also granted, from the date of the Impugned Award till

the date of its recovery. Further, the Claimant was also held entitled to

recover the amount of Rs. 22 lakhs towards the cost of litigation and

expenses from the Respondent.

FAO(OS) (COMM) 246/2023 Page 7 of 25

15. Aggrieved by the award dated 20.11.2020, the Respondent

instituted a petition under Section 34 of the Act of 1996 before this

Court, challenging, inter alia, the refusal of specific performance, the

findings on readiness and willingness, the rejection of its defences on

termination and refund, and the award and quantification of damages

in favour of the Claimant. However, the said petition was dismissed

by way of the Impugned Judgment.

16. Accordingly, dissatisfied by the findings rendered by the LSJ in

the Impugned Judgment, the Respondent by way this Appeal has

sought the indulgence of this Court in examining the correctness of

the findings thereof.

CONTENTIONS OF THE PARTIES:

17. Learned counsel for the Appellant (Respondent before the

Arbitral Tribunal), while controverting the findings of the Impugned

Judgment, has made the following submissions:

17.1. It has been argued that the LSJ failed to appreciate that the

Claimant has failed to lead any cogent evidence to establish its

continuous readiness and willingness to perform its obligations under

the Agreement, as mandatorily required under Section 16(c) of the Act

of 1963.

17.2 It has been argued that the LSJ failed to take into consideration

that continuous readiness and willingness is a condition precedent for

the grant of relief of specific performance, and the absence thereof

disentitles a party to such relief. Reliance in this regard was placed on

FAO(OS) (COMM) 246/2023 Page 8 of 25

the decision of the Supreme Court in N.P. Thirungnanam v Dr. R.

Jagan Mohan Rao & Ors

1

.

17.3 It has been further argued that the LSJ failed to take into the

categorical admission made by the Director of the Claimant during his

cross examination, wherein he stated that the Claimant is willing to

comply with the terms of the Agreement only subject to the revision

of all prices. As per the learned counsel, the same clearly evinced the

Claimant‟s lack of intention to perform the Agreement as executed

and demonstrated an absence of the requisite readiness and

willingness in law.

17.4 Learned counsel also submitted that even while upholding the

award of damages, the LSJ failed to notice that the LSA had

overlooked the express stipulation contained in Clause (v)(d) of the

Agreement, which contemplated imposition of penalty for delay solely

upon the Claimant. It was argued that the Agreement did not envisage

any penalty or damages being levied upon the Respondent and

therefore, the award of damages against the Respondent was contrary

to the contractual framework.

17.5 Lastly, it is argued that the LSJ failed to take note of the fact

that the LSA did not even frame any specific issue with respect to the

Claimant‟s readiness and willingness, which was a fundamental and

determinative issue for adjudication of the dispute, particularly in the

context of the claim for specific performance. The absence of such an

issue, it was argued, vitiated the arbitral findings as well as the

1

(1995) 5 SCC 115

FAO(OS) (COMM) 246/2023 Page 9 of 25

Impugned Judgment.

18. Per contra, learned senior counsel for the Respondent/Claimant

has made the following submissions:

18.1 It has been argued that the LSJ has rightly upheld the Impugned

Award, and no ground is made out for interference by this Court,

especially in exercise of its limited appellate jurisdiction under

Section 37 of the Act of 1996.

18.2 It has further been argued that the Respondent is estopped from

raising any dispute with regard to the readiness and willingness of the

Claimant to perform the Agreement at this stage. Reliance in this

regard has been placed on the unequivocal statement made by the

learned counsel for the Respondent before the LSA, which reads as

under:

(iii) Mr. Jugal Bagga, learned counsel for the Respondent at the

outset argued, that the Respondent has no objection if the award for,

specific performance of the Collaboration Agreement/MoU) dated

07.11.2011 is passed and the Respondent is directed to get the date for

completion of the construction on the plot in question extended from

the concerned Municipal authorities. This was opposed by Mr. B.R.

Sharma, Advocate for Mr. S.K. Mittal, the director of the Respondent.

Relying on the aforesaid, it has been argued that the Respondent did

not dispute the readiness and willingness of the Claimant to perform

its contractual obligations.

ANALYSIS:

19. This Court has heard the learned counsel for the parties at

considerable length and has also undertaken a thorough and

comprehensive examination of the entire appeal record, including the

FAO(OS) (COMM) 246/2023 Page 10 of 25

Impugned Judgment by the LSJ and the Impugned Award passed by

the LSA.

20. The core issue that falls for the consideration of this Court is

whether, within the narrow confines of interference permissible under

Sections 34 and 37 of the Act of 1996, the Respondent has made out

any ground to set aside the Impugned Award dated 20.11.2020, as

upheld by the Impugned Judgment of the LSJ, in so far as the Award

(i) declines the relief of specific performance of the Collaboration

Agreement dated 07.11.2011, and (ii) holds the termination of the

Agreement by the Respondent to be illegal and consequently grants

the Claimant damages in the sum of Rs. 1.65 crores along with

interest.

21. At the outset, it is pertinent to highlight that this Court, while

sitting in an appeal under Section 37 of the Act of 1996, is conscious

about the limited scope of interference that can be exercised in such

proceedings. An appeal under Section 37 of the Act of 1996, is narrow

in its compass and is confined to examining the legality of findings

rendered by the Court exercising jurisdiction under Section 34 of the

Act of 1996. The appellate jurisdiction under Section 37 of the Act of

1996 is akin to, and cannot travel beyond, the restrictions imposed

upon the Court under Section 34 of the Act of 1996; it does not confer

a general appellate power to reassess the merits of the Impugned

Award.

22. Both Sections 34 and 37 of the Act of 1996 are structured to

ensure minimal judicial interference with the Arbitral Awards, in

FAO(OS) (COMM) 246/2023 Page 11 of 25

order to preserve the time-efficient and expeditious nature of

arbitration as an alternative dispute resolution mechanism.

Consequently, the Court is precluded from re-appreciating evidence,

re-assessing factual findings, or sitting in appeal over the Arbitrator‟s

interpretation of the contract, so long as the view adopted by the

Arbitrator is a plausible one founded on the material available on

record. Interference is permissible only on the limited grounds

statutorily enumerated in Section 34 of the Act of 1996, including

where the award is in conflict with the public policy of India or is

vitiated by patent illegality going to the root of the matter, and even

then, re-appreciation of evidence is expressly impermissible.

23. The Supreme Court has consistently affirmed that a Court under

Section 34 of the Act of 1996 does not sit in appeal over an Arbitral

Award, and that an appellate court under Section 37 of the Act of

1996 has an even more circumscribed jurisdiction, being confined to

testing whether the Court acting under Section 34 of the Act of 1996

has kept its findings within the bounds of the limited statutory power

vested in it. Consequently, this Court, in the present appeal under

Section 37 of the Act of 1996, cannot undertake an independent

reassessment of the merits of the dispute, nor can it substitute its own

view for that of the Arbitrator, merely because another view is

possible.

24. The Supreme Court in the judgment of Punjab State Civil

Supplies Corpn. Ltd. v. Sanman Rice Mills

2

, contemplated upon the

limited and supervisory nature of an appeal under Section 37 and has

2

2024 SCC OnLine SC 2632

FAO(OS) (COMM) 246/2023 Page 12 of 25

observed that:

“11. Section 37 of the Act provides for a forum of appeal inter-alia

against the order setting aside or refusing to set aside an arbitral

award under Section 34 of the Act. The scope of appeal is naturally

akin to and limited to the grounds enumerated under Section 34 of the

Act.

12. It is pertinent to note that an arbitral award is not liable to be

interfered with only on the ground that the award is illegal or is

erroneous in law that too upon reappraisal of the evidence adduced

before the arbitral trial. Even an award which may not be reasonable

or is non-speaking to some extent cannot ordinarily be interfered with

by the courts. It is also well settled that even if two views are possible

there is no scope for the court to reappraise the evidence and to take

the different view other than that has been taken by the arbitrator. The

view taken by the arbitrator is normally acceptable and ought to be

allowed to prevail.

13. In paragraph 11 of Bharat Coking Coal Ltd. v. L.K. Ahuja, it has

been observed as under:

“11. There are limitations upon the scope of interference in

awards passed by an arbitrator. When the arbitrator has

applied his mind to the pleadings, the evidence adduced before

him and the terms of the contract, there is no scope for the

court to reappraise the matter as if this were an appeal and

even if two views are possible, the view taken by the arbitrator

would prevail. So long as an award made by an arbitrator can

be said to be one by a reasonable person no interference is

called for. However, in cases where an arbitrator exceeds the

terms of the agreement or passes an award in the absence of

any evidence, which is apparent on the face of the award, the

same could be set aside.”

14. It is equally well settled that the appellate power under Section 37

of the Act is not akin to the normal appellate jurisdiction vested in the

civil courts for the reason that the scope of interference of the courts

with arbitral proceedings or award is very limited, confined to the

ambit of Section 34 of the Act only and even that power cannot be

exercised in a casual and a cavalier manner.

15. In Dyna Technology Private Limited v. Crompton Greaves

Limited, the court observed as under:

“24. There is no dispute that Section 34 of the Arbitration Act

limits a challenge to an award only on the grounds provided

therein or as interpreted by various courts. We need to be

cognizant of the fact that arbitral awards should not be

interfered with in a casual and cavalier manner, unless the

court comes to a conclusion that the perversity of the award

goes to the root of the matter without there being a possibility

FAO(OS) (COMM) 246/2023 Page 13 of 25

of alternative interpretation which may sustain the arbitral

award. Section 34 is different in its approach and cannot be

equated with a normal appellate jurisdiction. The mandate

under Section 34 is to respect the finality of the arbitral award

and the party autonomy to get their dispute adjudicated by an

alternative forum as provided under the law. If the courts were

to interfere with the arbitral award in the usual course on

factual aspects, then the commercial wisdom behind opting for

alternate dispute resolution would stand frustrated. 25.

Moreover, umpteen number of judgments of this Court have

categorically held that the courts should not interfere with an

award merely because an alternative view on facts and

interpretation of contract exists. The courts need to be cautious

and should defer to the view taken by the Arbitral Tribunal even

if the reasoning provided in the award is implied unless such

award portrays perversity unpardonable under Section 34 of

the Arbitration Act.”

16. It is seen that the scope of interference in an appeal under Section

37 of the Act is restricted and subject to the same grounds on which

an award can be challenged under Section 34 of the Act. In other

words, the powers under Section 37 vested in the court of appeal are

not beyond the scope of interference provided under Section 34 of the

Act.

17. In paragraph 14 of MMTC Limited v. Vedanta Limited, it has

been held as under:

“14. As far as interference with an order made under Section

34, as per Section 37, is concerned, it cannot be disputed that

such interference under Section 37 cannot travel beyond the

restrictions laid down under Section 34. In other words, the

court cannot undertake an independent assessment of the merits

of the award, and must only ascertain that the exercise of power

by the court under Section 34 has not exceeded the scope of the

provision. Thus, it is evident that in case an arbitral award has

been confirmed by the court under Section 34 and by the court

in an appeal under Section 37, this Court must be extremely

cautious and slow to disturb such concurrent findings.”

18. Recently a three-Judge Bench in Konkan Railway Corporation

Limited v. Chenab Bridge Project Undertaking referring to MMTC

Limited (supra) held that the scope of jurisdiction under Section 34

and Section 37 of the Act is not like a normal appellate jurisdiction

and the courts should not interfere with the arbitral award lightly in a

casual and a cavalier manner. The mere possibility of an alternative

view on facts or interpretation of the contract does not entitle the

courts to reverse the findings of the arbitral tribunal.

CONCLUSION:

20. In view of the above position in law on the subject, the scope of the

intervention of the court in arbitral matters is virtually prohibited, if

FAO(OS) (COMM) 246/2023 Page 14 of 25

not absolutely barred and that the interference is confined only to the

extent envisaged under Section 34 of the Act. The appellate power of

Section 37 of the Act is limited within the domain of Section 34 of the

Act. It is exercisable only to find out if the court, exercising power

under Section 34 of the Act, has acted within its limits as prescribed

thereunder or has exceeded or failed to exercise the power so

conferred. The Appellate Court has no authority of law to consider the

matter in dispute before the arbitral tribunal on merits so as to find

out as to whether the decision of the arbitral tribunal is right or

wrong upon reappraisal of evidence as if it is sitting in an ordinary

court of appeal. It is only where the court exercising power under

Section 34 has failed to exercise its jurisdiction vested in it by Section

34 or has travelled beyond its jurisdiction that the appellate court can

step in and set aside the order passed under Section 34 of the Act. Its

power is more akin to that superintendence as is vested in civil courts

while exercising revisionary powers. The arbitral award is not liable

to be interfered unless a case for interference as set out in the earlier

part of the decision, is made out. It cannot be disturbed only for the

reason that instead of the view taken by the arbitral tribunal, the other

view which is also a possible view is a better view according to the

appellate court.

21. It must also be remembered that proceedings under Section 34 of

the Act are summary in nature and are not like a full-fledged regular

civil suit. Therefore, the scope of Section 37 of the Act is much more

summary in nature and not like an ordinary civil appeal. The award

as such cannot be touched unless it is contrary to the substantive

provision of law; any provision of the Act or the terms of the

agreement.”

(emphasis supplied)

25. It is in this backdrop that we now proceed to examine the

arguments advanced by the Respondent in the present Appeal, thereby

questioning the evaluation of readiness and willingness by the LSA,

and his assessment of damages.

26. It has been argued by the learned counsel for the Respondent

that the LSA failed to frame issues with respect to the readiness and

willingness of the Claimant to perform its obligations. However, a

holistic reading of the Impugned Award, particularly the segment

styled as “CONCLUSION (I)–(VII)”, makes it evident that the prayers

FAO(OS) (COMM) 246/2023 Page 15 of 25

and claims articulated in the statement of claim were themselves

treated as the central questions for determination.

27. The Impugned Judgment correctly records that the LSA, in

substance, addressed whether specific performance of the Agreement

dated 07.11.2011 ought to be granted (Conclusion I); whether the

Agreement attracted compulsory registration under Section 17(2)(v)

of the Registration Act, 1908 (Conclusion II); whether the Agreement

constituted a concluded and enforceable contract (Conclusion III);

whether the termination vide letter dated 22.03.2014 was legal and

justified (Conclusions IV and V); and whether, in consequence, the

Claimant was entitled to damages and interest, and in what quantum

(Conclusion VI).

28. A reference is also to be made to the prayers of the Claimant

through which, it sought for specific performance, for a declaration as

to the validity and enforceability of the Agreement, and, in the

alternative, for damages with interest. The said prayer thus stood

adopted as the real issues in controversy and was answered through

reasoned conclusions. In these circumstances, the mere absence of a

separately numbered “issue” on readiness and willingness or on

damages cannot be elevated to a violation of natural justice or to a

ground seeking interference under Section 34 of the Act of 1996, so

long as the underlying controversies were factually and legally

addressed with reasons, which they indisputably were.

29. Turning now to the effect of rejection of specific performance on

the entitlement to damages, the LSA declined the discretionary relief

FAO(OS) (COMM) 246/2023 Page 16 of 25

of specific performance after a close scrutiny of the contractual terms,

the nature and duration of the construction obligations, and the

necessity of continuous supervision over quality, materials, timelines

and allied aspects. Taking the aforesaid into consideration, it was

concluded that the Agreement fell within the class of contracts

involving performance of continuous duties which a court or tribunal

cannot effectively supervise, as contemplated by Section 14 (c) of the

Act of 1963.

30. Notably, the aforesaid conclusion was not reached in vacuo by

the LSA, on the contrary while reaching to such conclusion, he took

into account the pleadings of both parties, their conduct including the

settlement recorded on 18.09.2017, and the nature of the obligations

under the Agreement, which envisaged construction of a multi-storey

project over 18 months with ongoing design, quality and construction

supervision. The LSJ rightly held that this was, at the very least, a

plausible view on the application of Section 14 of the Act of 1963 to

the facts and the contract and hence lay beyond the narrow zone of

interference under Section 34 of the Act of 1996.

31. It is pertinent to highlight that once specific performance was

declined, the residual inquiry, as correctly recognised by both the LSA

and LSJ, was whether either party had committed breach of the

contract and, if so, whether the innocent party was entitled to

monetary compensation. The Impugned Award, as accurately

summarised in the Impugned Judgment, records clear findings that the

Agreement was a concluded and enforceable collaboration agreement;

and the plea of the Agreement being pending for want of financial or

FAO(OS) (COMM) 246/2023 Page 17 of 25

experience documents along with an alleged settlement with a former

director by return of the original Agreement and Rs. 50 lakhs were

unsupported by cogent evidence as such stood rejected; and that the

termination vide letter dated 22.03.2014 was illegal and unsustainable

in law, entitling the Claimant to recover damages for the losses

suffered.

32. In this regard, a reference is also made to the discussion of the

LSA in the Impugned Award with respect to the wrongful and illegal

termination of the Agreement on account of the Respondent, thereby

acting in violation of the agreed terms of the Agreement, which is set

out hereinafter. Undisputedly, the parties entered into the Agreement

on 07.11.2011, after which the Respondent failed to perform its

obligations stipulated under Clause (v)(c) of the Agreement, which

required the Respondent to apply and attain the building sanction plan

within a period of 60 days from the date of signing of the Agreement.

Relying upon the SDMC letter dated 24.01.2013, sanctioning the

building plans, it was noted that the said letter was given in response

to the application of the Respondent on 29.06.2012. In the view of the

turn of events as mentioned, it is evident that the Respondent applied

for the building sanction after a substantial delay of approximately

175 days, much beyond the prescribed period.

33. It also bears importance to note that the Respondent failed to

prove the effective steps which were taken by it to set out the building

plan approved after entering into the Agreement on receipt of Rs. 50

Lakhs. As already noted, in accordance with the Agreement, the first

step was to be taken by the Respondent to set out the building sanction

FAO(OS) (COMM) 246/2023 Page 18 of 25

plan approved, however, the Respondent miserably failed to lead

cogent evidence substantially proving its bona fide in attaining the

building plans after a substantial delay.

34. These findings squarely attract the general remedial rule in

Sections 73 and 74 of the Indian Contract Act, 1872, under which a

party who suffers loss by reason of the other‟s breach is entitled to

compensation for the loss naturally arising in the usual course of

things from such breach, subject to any contractual stipulation. The

LSJ has expressly endorsed this approach, noting that there is neither

any legal nor any contractual bar to the grant of monetary

compensation once the owner‟s (Respondent‟s) breach stood

established. The contention of the Respondent that the LSA, having

refused specific performance, was thereafter precluded from awarding

damages is not only contrary to the basic remedial structure of

contract law, but, more significantly, amounts to an attack on the

merits of the arbitral determination and not on any recognised ground

under Section 34(2) or 34(2A) of the Act of 1996. Within the settled

jurisprudence on Sections 34 and 37 of the Act of 1996, such an

argument is plainly inadmissible.

35. The contractual argument based on Clause (v)(d) of the

Agreement is also devoid of merit. The Respondent invoked the said

clause to contend that the Agreement envisaged a penalty or forfeiture

only against the builder (Claimant) in the event of delayed payments

and imposed no reciprocal liability on the owner to pay damages,

thereby rendering the award of damages contrary to the bargain. This

submission was advanced before the LSJ, who noted the contention

FAO(OS) (COMM) 246/2023 Page 19 of 25

that the Agreement did not contemplate any penalty or damages

payable by the owner, and that Clause (v)(d) of the Agreement

stipulated only a penalty upon the builder. However, the LSJ rejected

this “contractual bar” theory, holding that the Agreement, when

properly read, contained no prohibition against damages being

awarded in favour of the Claimant once the owner‟s breach was

found, and that the contrary reading propounded by the Respondent

rested on a convoluted and strained construction of the clause.

36. Whether Clause (v)(d) of the Agreement operates as a one-sided

stipulated consequence or is but one facet of a broader risk-allocation

within the collaboration framework is quintessentially a matter of

contractual interpretation, committed primarily to the Arbitral

Tribunal. As repeatedly emphasised by the Supreme Court,

construction of contractual terms is a subject matter of adjudication by

the Arbitrator, and a court exercising jurisdiction under Sections 34

and 37 of the Act of 1996, cannot supplant a reasonably possible view

with what it may regard as a more attractive interpretation. In the

absence of any demonstration that the LSA‟s view was perverse,

irrational, or wholly unmoored from the text and scheme of the

Agreement, the challenge founded upon Clause (v)(d) of the

Agreement cannot succeed in an appeal filed under Section 37 of the

Act of 1996.

37. With respect to readiness and willingness and the effect of the

parties‟ conduct and the subsequent settlement, the Respondent has

contended that the Claimant failed to establish continuous readiness

and willingness within the meaning of Section 16(c) of the Act of

FAO(OS) (COMM) 246/2023 Page 20 of 25

1963, and that there was a categorical admission in cross-examination,

in answer to Question 17, suggesting that the Claimant was willing to

perform only subject to price revision. These very points were urged

before the LSJ, who expressly noticed the reliance on the said

cross-examination. Nevertheless, it was held that the LSA‟s

conclusions on specific performance and liability were not founded on

a truncated reading of one answer in cross-examination, but on a

composite evaluation of the pleadings of both parties, their conduct,

especially the settlement recorded on 18.09.2017 and the nature and

structure of the Agreement. Further it was held that, a selective

emphasis on an isolated answer in cross-examination, cannot dislodge

a reasoned conclusion derived from the entire factual conspectus.

38. The LSA had, in particular, recorded that during the arbitral

proceedings the Respondent settled the matter and agreed to pay Rs.

1.65 crores towards full and final settlement, with the directors of the

Claimant-company individually assenting to those terms on oath,

although they subsequently failed to procure a Board resolution.

39. Further, the Claimant has drawn attention to the statement made

by the Respondent‟s counsel before the LSA that the owner had no

objection to an award of specific performance and would secure

requisite extensions of time from the municipal authorities. This

conduct, read with the settlement terms and the directors‟ sworn

statements, substantially undermines the Respondent‟s present

contention that the Claimant was not ready and willing. As such both

the LSA and the LSJ were entitled to regard the Respondent‟s own

conduct and its positions at the time of arbitration proceedings as

FAO(OS) (COMM) 246/2023 Page 21 of 25

highly material to the equities governing specific performance and to

the assessment of damages. Such evaluation is inherently

fact-intensive and falls squarely within the forbidden territory of

factual re-appreciation, which a court under Section 37 of the Act of

1996 cannot traverse.

40. As to the basis and quantum of damages, and the role played by

the 18.09.2017 settlement, the Impugned Award, as summarised in the

Impugned Judgment, makes it clear that after holding the termination

illegal and the Agreement to be concluded and enforceable, the LSA

turned to the Claimant‟s alternative claim for damages. He recorded

that on 18.09.2017 the parties had informed him that the disputes

stood fully and finally settled; that the directors of the owner-company

confirmed the settlement terms on oath; and that a consent award

could not be passed solely because the owner failed to place on record

a Board resolution authorising the compromise, owing to inter se

disputes among its directors.

41. Thereafter, the LSA treated the agreed figure of Rs. 1.65 crores

as the best available evidence for quantifying the Claimant‟s loss,

noting that both sides had contemporaneously accepted that figure as a

fair monetary resolution of the fallout of the Agreement and its

breach. Proceeding on this basis, the LSA awarded Rs. 1.65 crores

with pre-award interest at 12% per annum from 30.12.2017 (the outer

date stipulated for payment under the settlement) till the date of the

award, and post-award interest at the same rate till realisation. The

Impugned Judgment further notes that even during the arbitral

proceedings neither party disputed the quantum of damages or the rate

FAO(OS) (COMM) 246/2023 Page 22 of 25

of interest that had been agreed in the settlement, thereby reinforcing

the LSA‟s reliance on the figure as embodying the parties‟ own

assessment of fair compensation.

42. In doctrinal terms, Section 30 of the Act of 1996 expressly

empowers an arbitral tribunal to encourage settlement of the dispute

and, where the parties settle, to record the settlement in the form of an

award on agreed terms. However, the making of such an award is

predicated on the existence of valid authority and compliance with any

internal authorisation requirements, particularly in the case of

companies, much in the same way as Order XXIII Rule 3 of the Code

of Civil Procedure, 1908 [hereinafter referred to as „CPC‟] insists that

a lawful compromise must be in writing and signed or otherwise

validly assented to by authorised persons before a court can pass a

compromise decree.

43. In the present case, the LSA quite correctly declined to pass a

consent award under Section 30 of the Act of 1996 once it transpired

that the owner-company could not produce a Board resolution,

notwithstanding its directors having individually affirmed the

settlement and its counsel having recorded the compromise. This

approach is consonant with the cautionary requirements analogous to

those embodied in Order XXIII Rule 3 of the CPC. At the same time,

neither Order XXIII Rule 3 of the CPC nor any provision of the Act of

1963 forbids an adjudicatory forum from treating an unperfected or

formally defective settlement as a piece of evidence reflecting the

parties‟ own contemporaneous valuation of their respective rights and

liabilities.

FAO(OS) (COMM) 246/2023 Page 23 of 25

44. In the present case, the LSA did no more than adopt this

evidentiary use, he refused to confer the status of a consent award on

the 18.09.2017 settlement for want of proper corporate authority but

treated the mutually agreed sum of Rs.1.65 crores, coupled with the

absence of any subsequent dispute as to quantum, as the best indicator

of reasonable compensation for the wrongful termination. The legality

of this approach lies squarely within the domain of appreciation of

evidence; it does not offend any statutory or contractual prohibition

and hence cannot be impugned under Sections 34 or 37 of the Act of

1996.

45. Therefore, on an overall conspectus, no ground of patent

illegality or conflict with public policy, as understood in Section 34(2)

and (2A) of the Act of 1996 is made out. The Respondent‟s challenge,

both before the LSJ and in this appeal, is ultimately founded upon, an

invitation to re-weigh the evidence regarding readiness and

willingness, with undue emphasis on a single cross-examination

answer; a plea for a different construction of Clause (v)(d) of the

Agreement and of the contractual allocation of risk; and a grievance

about the absence of a separately formulated issue on readiness and

willingness.

46. The aforesaid grounds invoked for seeking interference of this

Court, even if taken at their highest, go only to the merits of the

Impugned Award without delineating any excess or failure of

jurisdiction by the LSA. Additionally, such contentions do not

disclose any breach of audi alteram partem or of the principles of

natural justice; hence, do not reveal any patent illegality going to the

FAO(OS) (COMM) 246/2023 Page 24 of 25

root of the matter in the sense elucidated by the Supreme Court, as

opposed to a mere error of law or fact.

47. Both the Impugned Award and the Impugned Judgment contain

reasoned findings on each substantial question, specific performance,

the nature and enforceability of the Agreement, the legality of

termination, and the entitlement and quantum of damages, grounded

in the pleadings, correspondences including the letters dated

22.03.2014 and 14.07.2014, the parties‟ conduct, and the settlement

recorded on 18.09.2017, and informed by the correct tests governing

interference with Arbitral Awards under Sections 34 and 37 of the Act

of 1996.

48. The submissions advanced on behalf of the Respondent, when

examined in entirety, essentially seek a re-appreciation of evidence

and reconsideration of factual and contractual findings returned by the

LSA. Such an exercise is clearly impermissible within the limited

scope of appellate scrutiny under Section 37 of the Act of 1996,

particularly when both the LSA and the LSJ have concurrently

rejected the claims after due consideration.

49. In these circumstances, this Court is of the considered view that

the Impugned Award does not suffer from perversity, patent illegality,

or violation of the fundamental policy of Indian law. The approach

adopted by the LSA is neither arbitrary nor unreasonable, and the LSJ

has rightly declined to interfere with the same.

50. Hence, no interference, is called, for keeping in view the limited

scope of interference against the Impugned Award and the concurrent

FAO(OS) (COMM) 246/2023 Page 25 of 25

findings recorded by the LSA and affirmed by the LSJ.

CONCLUSION:

51. In view of the foregoing discussion and findings, this Court

finds no infirmity in the Arbitral Award dated 20.11.2020 or in the

Impugned Judgment passed by the learned Single Judge. The

Appellant has failed to demonstrate any ground warranting

interference by this Court in exercise of its appellate jurisdiction under

Section 37 of the Act of 1996.

52. The present Appeal, being devoid of merit, is accordingly

dismissed.

ANIL KSHETARPAL , J.

AMIT MAHAJAN , J.

FEBRUARY 16, 2026

jai/hr