HARKISANDAS TULSIDAS PABARI Vs. RAJENDRA ANANDRAO ACHARYA

JUDGEMENT

(1.) A. THE CHALLENGE : These Appeals are filed by the Appellants challenging the order dtd. 11/10/2006 passed by the learned Single Judge of this Court allowing Arbitration Petition Nos.114 of 2006 and 119 of 2006 and setting aside the Award dtd. 21/9/2005 passed by the learned sole Arbitrator. By the Award, claim filed by the Appellants for specific performance of the Memorandum of Understanding was allowed by the Arbitral Tribunal.

(2.) A Memorandum of Understanding (MoU) dtd. 20/7/1994 was executed between the original Respondents and the Appellants under which the original Respondents Mr. Rajendra Acharya and Mr. Nandkishor Acharya agreed to sale their respective undivided shares, right, title and interest in the property situated at Paper Mill Lane, bearing City Survey Nos.1596 and 1597 at Girgaon Division, admeasuring 370 square meters (said property). The Memorandum of Understanding contemplated utilization of the entire FSI in respect of the said property as permitted by the local authorities. The consideration agreed for the transaction was Rs.18,00,000.00 payable to the Respondents in equal proportion. On 20/7/1994, the General Power of Attorney was executed by the original Respondents authorizing the Appellants to do various acts, deeds and things for development of the said property and to negotiate with tenants and arrive at arrangements. Between 1994 to 1996 Appellants paid amount of Rs.7,50,000.00 to the original Respondents. The Appellants apparently started negotiations with the tenants in January 1996 and were apparently successful in securing consent of two tenants. However, on 4/11/1996 original Respondent No.1 terminated the Memorandum of Understanding on the ground that the second installment of Rs.7,50,000.00 was not paid, in addition to raising issues of few other breaches allegedly committed by the Appellants. The Appellants disputed the contents of the said notice vide reply dtd. 2/12/1996. Respondents issued rejoinder dtd. 21/1/1997

(3.) In the above background, original Appellant No.1 referred the dispute to arbitration by addressing a letter dtd. 1/7/1997 to the nominated Arbitrator Mr. R.C. Sampat. Appellants filed statement of claim in October/November 1997, which was served on the Respondents on 15/11/1997. Original Respondent No.1- Mr. Rajendra Acharya requested the Arbitrator for supply of attested copy of papers and also forwarded a sum of Rs.1,500.00 towards Arbitrator fees. In November 1997 Respondent No.1 Mr. Rajendra Acharya filed his written statement before the learned Arbitrator raising various defences. He also filed a Counterclaim seeking recovery of amount of Rs.30,00,000.00 for mental agony. The learned Arbitrator proceeded to pass Award dtd. 1/4/1998 awarding the claim in favour of the Appellants. Respondents challenged the Award dtd. 1/4/1998 by filing Arbitration Petition No.225 of 1998. By order dtd. 28/9/1998 passed by this Court, the Award was set aside on the ground that notice of closure of arbitration proceedings was not given to the Respondents. The original records were sent back by this Court to the learned Arbitrator. Appellants approached the Arbitrator Mr. R.C. Sampat, who proceeded to fix date of hearing in arbitration proceedings vide letter dtd. 31/10/1998. One of the Respondents objected to continuation of the learned Arbitrator vide letter dtd. 4/12/1998 alleging that he was biased against the Respondents. By another letter of 7/12/1998 objection to continuation of Mr. Sampat as arbitrator was raised. The objection was rejected by the learned Arbitrator on 18/12/1998. Respondent No.1- Shri Rajendra Acharya thereafter filed his Reply in Counter-Claim on 28/10/1999. Respondents also sought stay of arbitration proceedings, which application was rejected by the learned Arbitrator. Both the parties led oral evidence.