M/S Silver Developers Vs M/S Vatsalya Builders and Developers Pvt. Ltd.

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2025:CGHC:45470-DB

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NAFR

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HIGH COURT OF CHHATTISGARH AT BILASPUR

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ARBA No. 19 of 2025

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1 - M/s Silver Developers Partnership Firm Registered Under Indian Partnership Act, Having Its Registered Office At Station Road, Raipur Chhattisgarh, Through Its Partner And Authorized Representative Shri Bhupendra Shah, S/o Shri Nauttamlal Shah, Partner At M/s Silver Developers Having Its Registered Office At Station Road, Raipur Chhattisgarh – 492001

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2 - Shri Bhupendra Shah S/o Nauttamlal Shah Aged About 67 Years Partner At M/s Silver Developers Having Its Registered Office At Station Road, Raipur Chhattisgarh

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3 - Shri Harish Khanna S/o Late Shri G.S. Khanna Aged About 51 Years Partner At M/s Silver Developers Having Its Registered Office At Station Road, Raipur Chhattisgarh

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4 - Shri Piyush Kumar Shah S/o S/o Shri Nauttamlal Shah Aged About 46 Years Partner At M/s Silver Developers Having Its Registered Office At Station Road, Raipur Chhattisgarh

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5 - Shri Hitesh Khatuja S/o Shri Mohan Khatuja Aged About 24 Years Partner At M/s Silver Developers Having Its Registered Office At Station Road, Raipur Chhattisgarh

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6 - Shri Chhagan Lal Mahawar S/o S/o Late Shri B.L. Mahawar Aged About 50 Years Partner At M/s Silver Developers Having Its Registered Office At Station Road, Raipur Chhattisgarh

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7 - Shri Harish Purohit S/o Late Shri M.M. Purohit Aged About 49 Years Partner At M/s Silver Developers Having Its Registered Office At Station Road, Raipur Chhattisgarh

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... Appellant(s)

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Versus

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1 - M/s Vatsalya Builders And Developers Pvt. Ltd. A Registed Company Registered Under The Indian Companies Act Through Its Director, Shri Prafulla

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2

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Puroshottam Gadge, Aged About 56 Years, Having Its Registed Office At 2nd Floor, Ganesh Chambers, Mehadia Sq. Dhantoli, Nagpur-440012

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2 - Smt. Veena Khanna W/o Harish Khanna R/o H-18, Rajeev Nagar, Raipur Chhattisgarh

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3 - Smt. Rajvig Wd/o Brijlal Vig R/o Kelkar Para, Raipur Chhattisgarh

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4 - Smt. Radha Khatuja W/o Mohan Khatuj R/o 101-102, Kuber Apartment, Shankar Nagar, Raipur Chhattisgarh

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5 - Smt. Varsh Shah W/o Atul Shah R/o 301, Mahavir Station Road, Lodhipara, Raipur Chhattisgarh

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... Respondent(s)

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(Cause Title taken from Case Information System)

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For Appellant : Mr. Kishore Bhaduri, Senior Advocate assisted by Mr. Harshmander Rastogi, and Ms. Neha Baid, Advocates.

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For Respondent(s) : None.

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Hon’ble Mr. Ramesh Sinha, Chief Justice Hon’ble Mr. Bibhu Datta Guru, Judge

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Order on Board

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Per Ramesh Sinha, Chief Justice

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04/09/2025

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1 Heard Mr. Kishore Bhaduri, learned Senior Advocate assisted by Mr. Harshmander Rastogi and Ms. Neha Baid, learned counsel for the petitioner.

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2 By this appeal under Section 37 of the Arbitration and Conciliation Act, 1996, read with Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, the appellants, seek setting aside of the judgment and order dated 05.07.2024 passed by the learned Judge, Commercial Court (District Judge Level) Raipur, in Case No.Arb. MJC 26 of 2022 by which the arbitration petition filed by the appellants herein challenging the arbitral

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award dated 06.08.2022 passed by the learned Sole Arbitrator, has been rejected.

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3 The facts, in brief, as projected by the appellants are that the appellant No.1 is a partnership firm registered under the Indian Partnership Act, 1932 and Appellants No.2 to 7 are the partners of the said firm. The respondent No.1 is engaged in the business of development of projects.

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4 The appellants (except appellant No.4) and respondents No.2 to 5 had entered into two agreements, a main agreement and a supplementary agreement, both dated 12.08.2011, with the respondent No.1 for sale of total land admeasuring 11.544 Hectares situated at village Sejbahar P.H.No.119/50 and at Village Mujgahan P.H.No.119/51, Tahsil and District- Raipur. The clauses also acknowledged the fact that the respondent No.1 had given Rs.1,00,00,000/- (Rupees One Crore Only) as earnest money to appellants which would be set off equally in four parts against the above mentioned four installments. This would mean that against each installment of 25% of total consideration amount, Rs.25 Lacs would be considered to be paid already to the Respondent No 1. As per clause 2 of the supplementary agreement dated 12.08.2011, it was agreed between the parties that the consideration of the land would be Rs.335/sq.ft (Rs.217/sq. ft to be given by cheque + Rs.117/sq.ft to be given in cash). The consideration amount decided between the parties was unequivocal and unconditional. Further, clause 2 of the agreement also envisaged that the plot size of the land after approval of layout and deduction of EWS land would be around 7,00,000 sq. ft. Thus, the total consideration of the subject property as per the agreement between the parties herein was Rs.23,45,00,000/- (Rupees Twenty Three Crore Forty Five Lacs Only). As per the terms of the agreement, the appellants made a request to the relevant authorities for sanctioning of layout on

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09.11.2011 and the layout was sanctioned by the authorities on 10.10.2013. A copy of the same was also provided to the respondent No.1 on the same day, after which the respondent No.1 had to pay its 1^st installment of agreed consideration, within 15 days. A copy of the approved layout containing the signature of the Manager of the respondent No.1, Mr. Rajpal Singh showing receipt of the same on 10.10.2013 itself was also filed before the learned Arbitrator along with a copy of the F.LR. filed in Civil Lines Police Station, Raipur in 2019 showing Mr. Rajpal Singh as Manager of the respondent Company but the same was overlooked by the learned Arbitrator.

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5 Mr. Bhaduri, learned Senior Advocate appearing on behalf of the appellants submit that the respondent No.1 failed to make the payment within the stipulated time. The respondent No.1 only made a total payment of Rs.3,51,00,000/- (Rupees Three Crores Fifty One Lacs Only) till date which is not even 25% of total consideration that had to be paid within 15 days of sanction of layout plan i.e. by 25.10.2013 Further, the total consideration amount towards the subject property was to be made in 9 months from the date of approval of layout. The respondent No.1 failed to fulfill its obligations under the agreements. The appellants invited the respondent No.1 for execution of sale deeds many times and also issued a letter dated 10.04.2014 to this effect. However, respondent No.1 did not act upon it. It is stated that the respondent No.1 did not had an intention of execution of sale deed and did not make any communication to the appellants after sanctioning of layout. It was only after a period of 10 months, on 24.08.2014, the respondents contacted the appellants for the first time when the term of the agreement had already lapsed. The appellants again issued a letter dated 17.09.2014 inviting the respondent No.1 for execution of sale deed but the respondent No.1 did not execute

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the agreement. Further, the respondent No.1 even without an intention to execute the agreement, entered into several agreements with prospective buyers and collected huge sums of money from third parties showing its malicious intention. Relying upon the assurances and the terms of the agreement between the parties, the appellants incurred huge expenses on the development of the said land. However, the respondent No I did not perform its obligations and failed to execute the agreement. It was due to breach of contractual agreement by the respondent No.1 that the dispute arose between the parties. Finally on 08.12.2017, the Hon'ble Sole Arbitrator was appointed with the consent of all the parties and the arbitral award was passed by the Sole Arbitrator on 06.08.2022 allowing the claim of the claimant (respondents herein) and directed the appellants to refund the amount paid by the respondent No.1 along with interest despite holding that the respondent No.1 was in breach of contractual obligations and rejected the entire counter claims of the appellants on technical grounds.

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6 The said award passed by the learned Sole Arbitrator was challenged by the appellants before the learned Commercial Court, (District Judge Level) Raipur, under Section 34 of the Act of 1996 which was also rejected affirming the award passed by the learned Sole Arbitrator.

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7 Mr. Bhaduri submits that the learned Commercial Court has has failed to appreciate that the learned Arbitrator has travelled beyond the terms of the contract despite the fact that it is well established that reliefs cannot be granted beyond the terms of the contract. Clause 14 of the agreement to sale dated 12.05.2011, i.e., main agreement, specifically states that in case of delay in payment, the appellants would get the plot registry executed for which the amount is paid by the respondent No.1 and the balance plots for which amount is not paid will be considered as legally

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cancelled for registry. The learned Commercial Court has erroneously directed the appellants to refund the amount received along with interest ignoring the fact that such an order is beyond the jurisdiction of the learned Arbitrator, as arbitrator being a creature of the statute, could not have travelled beyond the four corners of the contract. It has failed to exercise its supervisory role in checking the arbitrariness and patent illegality committed by the learned Sole Arbitrator while passing the award on the premise of restricted power of Court under Section 34 of Act of 1996. Clause 14 of the agreement specifically provides mechanism for closure of agreement and its consequences due to failure in making payments by the purchaser i.e. the respondents and the agreement does not stipulate any clause for return of the amount received and the only possible transaction was transfer of parcel of land in lieu of amount already received.

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8 Mr. Bhaduri further submits that the learned Sole Arbitrator as well as the learned Commercial Court failed to appreciate the fact that the appellants had sent written communications to the respondent No.1 to come for the registry of the plots for which amount was paid but contrary to the evidence on record, the learned Commercial Court held that the appellants had not acted in terms of the agreement as they too did not appear to have taken requisite steps towards execution of sale deeds like respondent No.1. In fact, the appellants had provided enough chances to the respondent No.1 as per clause 14 of the main agreement to appear for registry of the sale deeds, however, the Respondent No.1 was not ready and willing to execute the sale deeds and was in breach of the terms of the contract. Thus, it is amply clear that the appellants never refused to comply with its part of the obligation under the contract.

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9 It is next submitted by Mr. Bhaduri that both the learned Arbitrator as well as the learned Commercial Court have failed to gauge the fact that the Registrar of Chhattisgarh Real Estate Regulatory Authority has also filed an FIR against the Director and Manager of respondent No.1, which has been registered as Crime No.0623/2019 in PS Civil Lines, Raipur under Section 420 of the Indian Penal Code, 1860 stating that the respondent No.1 has flouted with the provisions of RERA Act, 2016 and has taken huge sum of money from the allottees. The conduct of the parties is pivotal to determine the disputes between them. The intention of respondent No.1 can be established by the fact that even after procuring huge sums of money from the general public, it chose not to pay amount to the appellants, flouting with the terms and conditions of the contract and blocked the amount from both the sides artificially giving rise to innumerable litigation. The learned Commercial Court as well as the learned Arbitrator have re-written the terms of the contract by allowing the respondent’s claim with respect to refund of the amount despite the fact that contrary is stated in the agreement to sale dated 12.08.2011. Hence, the order dated 05.07.2024 passed by the learned Commercial Court as well as the arbitral award dated 06.08.2022 passed by the learned Sole Arbitrator, deserves to be set aside.

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10 In support of his contentions, Mr. Bhaduri places its reliance on the decision of the Apex Court in Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd. {(2022) 1 SCC 131}, PSA SICAL Terminals Pvt. Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin & Others {(2023) 15 SCC 781}, MD, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd. {(2004) 9 SCC 619} and State of Rajasthan v. Nav Bharat Construction Co. {(2006) 1 SCC 86}.

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11 We have heard learned counsel appearing for the appellants and have also gone through the orders/award under challenge in this appeal.

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12 Both the award of the learned Sole Arbitrator as well as the learned Commercial Court as quite detailed one and after taking note of the sequence of events, the learned Commercial Court has rightly observed at paragraph No. 27 that the when the respondents asked for joint inspection and measurement of the site and execution of the sale deed, the same was refuted by the appellants vide notice dated 22.10.2014 mentioning absence of any provision for joint inspection in the agreement in itself is a pointer to the fact that the appellants were having an intention to put an end to the agreement as also remission of a cheque of Rs. 50 Lacs towards repayment of monies received from the respondents. The said fact has been taken note of by the learned Sole Arbitrator in its award while directing refund of the money. The act of repaying Rs. 50 Lacs and informing the respondents that the balance amount paid by them would be refunded shortly amply reflects that the appellants did not had any intention to continue with the agreement and there was no inclination on their part to enforce execution of registry of land corresponding to the advance consideration amount as per clause 14 of the main agreement.

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13 The contention raised by the learned counsel for the appellants that the direction for refund of money is unjust and beyond the terms of contract, the learned Commercial Court has rightly observed that the agreements executed between the parties was silent on the point of refund of money and there was no express prohibition with regard to refund or any contemplation as regards forfeiture of advance consideration amount in the event of premature termination of contract. The attempt of the appellant itself was an act of unjust enrichment. The reliance placed by

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the learned counsel for the appellants on the decisions rendered by the Apex Court are of no assistance as they are distinguishable on facts.

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14 When there is a dispute between the parties and the conduct of both the parties shows that they are not interested in taking the agreement any further, the best recourse would be to refund the amount paid by the respondents which the learned Sole Arbitrator has done and once the appellants have agreed for resolving their dispute through arbitration proceedings, then raising disputes again on one ground and the other would only frustrate the object of arbitration proceedings. No prejudice is even going to cause to the appellants if the appellants refund the amount paid by the respondents.

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15 The grounds raised in this appeal have no substance and we concur with the reasons and findings arrived at by the learned Commercial Court and as such, this arbitration appeal being devoid of merit, is dismissed .

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16 The records of Arb.MJC No. 26/2022 requisitioned by this Court, be sent to the learned Commercial Court (District Judge Level) Raipur, forthwith alongwith a copy of this judgment, for information and necessary action,if any.

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Sd/Sd/(Bibhu Datta Guru) (Ramesh Sinha) JUDGE CHIEF JUSTICE

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Amit

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AMIT KUMAR DUBEY Digitally signed by AMIT KUMAR DUBEY Date: 2025.09.08 16:00:02 +0530

M/S Silver Developers v. M/S Vatsalya Builders and Developers Pvt. Ltd.

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M/S Silver Developers v. M/S Vatsalya Builders and Developers Pvt. Ltd.

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