DDA  Vs SAMAR SINGH -Judgment by Delhi High Court

$~42
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 20.04.2022
+ O.M.P. (COMM) 22/2015
DDA ….. Petitioner
Through: Mr Ramesh Singh, Senior Advocate
with Ms Kanika Singh, Advocate with
Mr Shailendra Sharna, Advocates.

versus
SAMAR SINGH ….. Respondents
Through: None.

CORAM:
HON’BLE MR. JUSTICE VIBHU BAKHRU

VIBHU BAKHRU, J. (ORAL)
1. The Delhi Development Authority (hereafter �DDA�) impugns an Arbitral Award dated 23.07.2015 (hereafter �the impugned award�) rendered by an Arbitral Tribunal constituted by the Sole Arbitrator (hereafter �the Arbitral Tribunal�).
2. The arbitration was conducted under the aegis of the Delhi International Arbitration Centre (DIAC) and in accordance with its Rules. The dispute between the parties arises in respect of a parking site licensed to the respondent, being parking site at Group-IInd in front of Plot nos. 2-5, 8-22, 22-33, 42-44 at Nehru Place, New Delhi (hereafter �the Parking Site�). Whilst, DDA claims that it is entitled to receive the entire agreed license fee for the Parking Site, the respondent disputes the same. According to the respondent, he was handed over possession of only a part of the Parking Site and therefore, the license fee payable for the entire Parking Site was required to be reduced accordingly. The Arbitral Tribunal had accepted the respondent�s contention and awarded a sum of ?1,97,21,012/-, in favour of the respondent along with interest at the rate of 9% per annum from the date of filing the claim (that is, 01.05.2011) till realization of the entire amount.
3. DDA contends that the impugned award is vitiated by patent illegality on the face of the award. This is, essentially, the controversy that is required to be addressed in this petition.
Factual Background
4. On 30.03.2006, DDA had issued a Notice Inviting Tenders for allotment of various parking sites within its jurisdiction. The respondent furnished its bid for allotment of the Parking Site and offered a license fee of ?10,56,000/- per month. The respondent claimed that its bid was the highest, however, DDA did not hand over the Parking Site at the material time. On further inquiries, by a letter dated 25.07.2006, DDA informed the respondent that a suit had been filed before a Civil Judge, Delhi and orders had been passed directing DDA to maintain status quo in respect of the Parking Site. DDA stated that it was contesting the stay order and once the stay order was vacated, it would hand over the Parking Site to the respondent. Thereafter, by a letter dated 01.12.2006, DDA informed the respondent that it was declared as the successful tenderer, in respect of the Parking Site. The license was for a term of three years. The license fee was fixed at ?10,56,000/- per month with an increase of 10% per annum. DDA also called upon the respondent to furnish the requisite documents within a period of fifteen days, failing which, the allotment would be cancelled.
5. Thereafter, on 14.12.2006, the respondent requested DDA to inform him as to when the possession of the Parking Site would be handed over. The respondent further stated that he was ready and willing to hand over the balance amount of ?31,68,000/-, in addition to the sum of ?21,12,000/-, which was already deposited by him.
6. DDA sent another letter dated 13.04.2007 directing the respondent to deposit three months� advance license fee along with the requisite documents within a period of seven days from the date of issuance of the said letter, failing which, the allotment of the Parking Site in favour of the respondent would be cancelled and the earnest money forfeited.
7. Thereafter, under the cover of a letter dated 20.04.2007, the respondent sent a demand draft for a sum of ?22,68,000/-.
8. DDA issued a letter of allotment dated 23.04.2007, granting a license to the respondent in respect of the Parking Site. The respondent was permitted to collect parking charges from the public at the stipulated rate and on the terms and conditions as set out in the Tender Documents. The license was for a period of three years commencing from 23.04.2007 till 22.04.2010. As agreed, the license fee was subject to annual increase of ten percent.
9. On the same day, that is, on 23.04.2007, DDA handed over physical possession of the Parking Site to the respondent. According to the respondent, only 63% of the area of the Parking Site was handed over to respondent as the balance 37% of the area was unavailable due to upgradation work.
10. Thereafter, by a letter dated 25.04.2007, the respondent informed DDA that approximately 50% of the Parking Site was occupied by DDA�s contractor and he had cordoned off the said area by placing barricades. The respondent called upon DDA to re-measure the Parking Site in order that the license fee could be reduced accordingly. The respondent sent several communications to DDA for addressing the said issue, however, the same remained unresolved. In the meanwhile, the respondent did not pay the full license fee as demanded by DDA.
11. On 21.10.2009, DDA sent a notice calling upon the respondent to pay a sum of ?32,73,600/-, which, according to DDA, was the license fee outstanding as on 22.04.2009. It also called upon the respondent to show cause why allotment of the Parking Site not be cancelled. The respondent responded to the said notice by a letter dated 26.10.2009. The respondent disputed that the amount as demanded by DDA was payable and requested DDA to furnish a Statement of Accounts regarding the same. He also claimed that earnest money of ?21,12,000/- was lying deposited with the respondent. According to the respondent, he had paid a sum of ?3,87,55,200/- to DDA including the earnest money and the security deposit.
12. In view of the aforesaid disputes, the respondent filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before this Court [OMP No. 646/2009], inter alia, praying that the operation of the show cause notice be stayed. By an order dated 06.11.2009, passed by this Court in that petition, the show cause notice was stayed subject to the respondent depositing a sum of ?20,00,000/- with the Registry of this Court. DDA was further restrained from taking any coercive action against the respondent without the permission of this Court. The respondent complied with the said condition and deposited a sum of ?20,00,000/- by way of a fixed deposit receipt issued by KVB Karur Vysaya Bank, in favour of the Registrar General of this Court. By a subsequent order dated 12.01.2011, this Court granted liberty to the parties to move the Arbitral Tribunal with regard to disbursement of the amount of ?20 lakhs.
Statement of Claims
13. After the Arbitral Tribunal was constituted, the respondent, inter alia, filed a Statement of Claims. The respondent claimed a sum of ?1,54,72,512/- (Claim no.1) as a refund of the proportionate license fee, as according to the respondent, he was not handed over possession of 37% of the Parking Site (Claim no.1). In addition, the respondent claimed interest at the rate of 15% per annum on the amounts due under Claim no.1, quantified at ?44,82,019/- (Claim No.2) and interest at the rate of 15% per annum on the earnest money quantified at ?3,36,763/- (Claim No.3). The respondent also sought refund of ?31,68,000/- of the advance license fee along with interest (Claim Nos. 4 and 5) and ?20 lakhs deposited by it pursuant to the directions passed by this Court (Claim no.6). Further, the respondent claimed a sum of ? 3,00,000/- as loss of profits (Claim no.7); and, ? 4,00,000/- as costs of the arbitration proceedings (Claim no.8).
Impugned award
14. The Arbitral Tribunal accepted the respondent�s contention and found that the license fee was required to be reduced by 37% in proportion to the actual area handed over to the respondent. Accordingly, the license fee payable by the respondent for the said period was determined at ?2,63,50,552/-. The Arbitral Tribunal found that the respondent had paid a sum of ?4,00,98,400/- and accordingly, directed the refund for ?1,37,57,848/- being the amount paid in excess of the license fee as determined.
15. The Arbitral Tribunal also allowed interest on the said awarded amount at the rate of 9% per annum from 01.05.2010 till filing of the Statement of Claims on 30.04.2011. The same was quantified at ?22,70,044/-. The Arbitral Tribunal rejected the respondent�s claim for interest on the earnest money deposited as no such payment was contemplated. However, the Arbitral Tribunal accepted the respondent�s claims for refund for the security deposit; the advance license fee; and, interest on the advance license fee at the rate of 9% per annum from 23.04.2010 till 30.04.2011 quantified at ?2,85,120/-.
16. The respondent�s claim for loss of profits (Claim no.7) was rejected. The Arbitral Tribunal also awarded a sum of ?2,20,000/- as costs.
Reasons and conclusion
17. Mr Ramesh Singh, learned senior counsel appearing for the petitioner, has assailed the impugned award, essentially, on two fronts. First, he submitted that the Arbitral Tribunal had grossly erred in not appreciating that the respondent had submitted an undertaking to the effect that he had understood the terms of the allotment of the Parking Site and had unequivocally accepted the same. He submitted that the terms and conditions as set out in the Tender Documents also required the bidder to �inspect the site and satisfy himself about the location, area and its business prospects� (Clause VII of General Conditions). He submitted that in view of the above, it was not open for the respondent to claim that the entire Parking Site was not available.
18. Second, he submitted that the respondent�s claim was in the nature of seeking damages and compensation for not handing over possession of the part of the Parking Site. However, the respondent had failed to establish that it had suffered any loss. He submitted that the Notice Inviting Tenders had set out the details of the Parking Site and also mentioned its capacity. The Parking Site had the capacity for parking 255 cars and 340 scooters. He submitted that the respondent had not established that the area of the Parking Site handed over to the respondent could not accommodate the stipulated number of vehicles. The impugned award amounted to granting damages without any evidence and thus, it was vitiated by patent illegality.
19. The Arbitral Tribunal had found that in fact, DDA had not handed over the entire Parking Site to the respondent. The Arbitral Tribunal had accepted the respondent�s claim that only 63% of the Parking Site had been handed over to him on the basis of the possession slip signed by the parties. The contents of the possession slip are reproduced below:
�DELHI DEVELOPMENT AUTHORITY
Commercial Estate Branch
Vikas Sadan, I.N.A., New Delhi

POSSESSION SLIP OF PARKING SITE
In compliance of letter No. F.99(66) 2007/LPC/Parking/228 dated 23.4.07 issued by Asstt. Director (LPC)/DDA, the possession of the Parking site Group-IInd in front of Plot No. 2-5, 8-22, 22-23, 42-44 at Nehrul Place is hereby handed over to Shri Samar Singh S/o late Shri Surya Bhan Singh, 1898-B19, Gobind Puri, Kalkaji Extension, New Delhi today on dated 23/4/07. The parking area is found less (approx. 37%) due to upgradation work.

Taking Over By: Handed Over By:

Taken over possession Sd/-
without any prejudice to my rights.

Sd/-
23/4/07 J.E.(CE)/DDA
Sd/-�

20. It is clear from the above that the respondent was not handed over the complete Parking Site; the area handed over to him was 37% less.
21. The contention that the respondent was not entitled to make any claim as he had furnished an undertaking that he would abide by the terms and conditions of the tender, is unmerited. Although, the respondent was required to apprise himself about the location, area and its business prospects, the same did not imply that the respondent had agreed to accept only part of the Parking Site. It was clearly DDA�s obligation to ensure that the respondent was handed over possession of the entire Parking Site, which was allotted to it. The unimpeachable evidence on record (possession slip) establishes that DDA had defaulted in its obligations to hand over the Parking Site.
22. The contention that the respondent was obliged to prove any further damages after establishing that DDA had handed over only part of the Parking Site, is bereft of any merit. Once it is established that DDA had handed over only a part of the Parking Site, the respondent was entitled to seek proportionate reduction in the license fee. There is no infirmity in assuming that the license fee was based on the area of the Parking Site. DDA was not concerned with the revenue generated by the respondent from the Parking Site or the actual number of vehicles parked on that site.
23. This Court finds no error in the decision of the Arbitral Tribunal to accept the respondent�s claim for reduction in the license fee proportionate to the area of the Parking Site handed over to him. In any view, the Arbitral Tribunal�s view is a plausible view and warrants no interference under Section 34 of the A&C Act.
24. The petition is unmerited and is, accordingly, dismissed.

VIBHU BAKHRU, J

APRIL 20, 2022
Pkv/v
Click here to check corrigendum, if any

O.M.P. (COMM) 22/2015 Page 1 of 1