A. MURUGAN Vs. RAINBOW FOUNDATION LTD

JUDGEMENT

(1.) The first respondent in the arbitration is the Petitioner in O.P. No.711 of 2012 whereas the 2, 3, 4 and 5th respondents therein are the Petitioners in O.P. No.698 of 2012. Both the O.P.'s are filed to set aside the Award dated 20.08.2012 and, therefore, they are disposed of by this common order.

(2.) I heard the learned Senior Counsel, Mr.T.V.Ramanujam, on behalf of the Petitioners in O.P.No.698 of 2012 and Respondents 2 to 5 in O.P.No.711 of 2012, Mr.R.Thiagarajan, the learned counsel for the first respondent in both O.P.'s and Mr.Shah, the learned counsel for the 3rd Respondent in O.P. No.698 of 2012 and 6th Respondent in O.P. No.711 of 2012. For the sake of convenience, the Petitioner in O.P. No.711 of 2012 is referred to individually as Vendor No.1 and the Petitioners in O.P. No. 698 of 2012 are referred to as Vendors No.2. They are collectively referred to as the Vendors. Similarly, the first Respondent in both O.P.'s is referred to individually as the Purchaser company and the 3rd Respondent in O.P. No.698 of 2012 and 6th Respondent in O.P. No.711 of 2012 as Purchaser No.2. They are referred to collectively as the Purchasers.

(3.) The subject matter of the dispute is an Agreement of Sale dated 08.06.2006 (the Agreement) between the Petitioners in the two O.P.'s as the Vendors, on the one hand, and M/s.Rainbow Foundations Ltd and Mr. P. Dinesh Kumar as the Purchasers, on the other. As per the terms of the Agreement, the Vendors agreed to sell and the Purchasers agreed to purchase the property described in the schedule thereto for a total sale consideration of Rs.5 crores. Out of the said total sale consideration, it is the admitted position that a sum of Rs.1 crore was paid by the Purchasers by demand drafts dated 08.06.2006. The Agreement further provided that the Purchasers agree to pay the balance sale consideration of Rs.4 crores on or before the date of registration of the sale deed or within 30 days from the date of the Agreement, whichever is earlier. As per clause 11 of the Agreement, time is of the essence of the contract and in the event of non payment of sale consideration, the Agreement will not be kept subsisting after 7th July 2006. According to the Vendors, the Purchasers did not pay the balance sale consideration within the stipulated 30 day period and instead requested for an extension of time. Therefore, by a telegram dated 08.07.2006, the Agreement was terminated by the Vendors and the Purchasers were directed to take a refund of the advance amount. This was followed by a lawyer's notice dated 09.07.2006, wherein the Purchasers were informed about the termination of the Agreement and the advance amount of Rs.1 crore was refunded after forfeiting 25% thereof as per the terms of the Agreement. On the other hand, the case of the Purchasers is that they met the Vendors on 05.07.2006, 06.07.2006 and 07.07.2006 and offered to pay the balance sale consideration by two cheques dated 07.07.2006 for a sum of Rs.55,00,000/- and Rs.3,45,00,000/- respectively and that the Vendors refused to receive the cheques on the ground that they were in the midst of a pooja and that, therefore, the transaction could be concluded later. The Purchasers further stated that on 07.07.2006, they prepared and endeavoured to hand over a sale deed to be executed by Vendors No. 2 and a power of attorney to be executed by Vendor No.1. Thus, a dispute arose between the parties and in these facts and circumstances, after exchanging notices through lawyers, the arbitration clause in the Agreement was invoked and arbitration proceedings were initiated by the Purchasers under the Agreement seeking specific performance of the Agreement. In the said Arbitration, after pleadings were completed, the learned Arbitrator framed issues and each of the parties adduced both oral and documentary evidence. The Purchasers adduced evidence through three witnesses and filed documents, which were exhibited as Exhibits C1 to C16. The Vendors adduced evidence through six witnesses and filed documents, which were exhibited as Exhibits R1 to R23. Upon consideration of the pleadings, evidence and oral arguments, the learned Arbitrator held that the Purchasers are entitled to specific performance of the Agreement upon payment of the balance sale consideration of Rs.4 crores to the Vendors within two months from the date of the Award and directed the Vendors to execute and register the sale deed/power of attorney in favour of the Purchasers or their nominees within 10 days from the receipt of the balance sale consideration. As regards Purchaser No. 2, Mr.P.Dinesh Kumar, the parties were permitted to resolve the inter se issue as between them. The said Award dated 20.08.2012 is impugned herein by this Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act).