M.P.Housing Board vs Progressive Writers & Publishers

short `the Board') and Progressive Writers and

Publishers, New Delhi (hereinafter called as the

`depositor') entered into an agreement whereunder the

Board agreed to construct a building called the 2

`Hitavada Press Complex' on the land admeasuring

33932 sq. ft. situated at T.T.Nagar, Bhopal. The terms

of agreement, inter-alia, provided that the Board would

execute the construction of Hitavada Press Complex

and charge 5% supervision charges of the actual

expenditure on the project. The cost of construction

was to be borne by the depositor. The depositor was

required to place funds including supervision charges at

the disposal of the Board in advance as agreed upon.

The work was expected to be completed within 18-24

months. The possession of the land was handed over

to the Board for the purposes of construction of

building. In case of overrun of expenditure and funds,

the revised estimates were to be submitted and the

administrative approval of the depositor was required

to be obtained. In the event of any dispute, the matter

was required to be referred to the Secretary,

Government of Madhya Pradesh for decision. 3

2. The cost of construction of the building was

estimated at Rs. 28 lakhs out of which the depositor

was required to deposit an amount of Rs. 14 lakhs at

the outset and the balance thereafter. The initial

amount of Rs.14 lakhs was accordingly deposited by

the depositor with the Board. However, the depositor

failed to deposit the balance amount. In the

meanwhile, the Board had paid the amounts from its

own funds in order to complete the construction of the

building. The depositor expressed its desire to retain

only that portion of the building where the printing

press was located including mezzanine floor along with

two adjacent halls on the first floor and accordingly

made a representation to the Board. The Board in its

turn agreed to the suggestion and thereafter parties

entered into the second building agreement dated May

4, 1977; under which it was expressly agreed between

the parties that the depositor would transfer the total

area of the land and building which was 33932 sq. ft. 4

and the Board would in turn re-transfer 7437 sq.ft. of

land along with hall having Press portion constructed

thereon for which the depositor would pay Rs. 3.50

lakhs to the Board in 15 equal yearly installments.

The Board agreed to grant a loan of Rs. 3.50 lakhs

repayable with interest against an equitable mortgage

of the Press building and the portion of the land

thereon. Out of the said amount, Rs. 50,000/- was to

be paid by the Board to Punjab and Sind Bank as per

the instructions of the depositor. It was also agreed

between the parties that the Board in order to acquire

full ownership of the entire complex shall return the

amount of Rs. 14 lakhs and for that purpose the

original documents pledged by the depositor with the

Punjab and Sind Bank were to be redeemed by the

Board upon payment of Rs.13.50 lakhs to the Bank.

Upon fulfillment of the said conditions, the Board was

entitled to complete the construction of the building in

its possession and enjoy the same as the full owner. 5

3. The Board in terms of the second building

agreement had paid the agreed sum to the Bank and

obtained the original title deeds of the part of the plot

admeasuring 19319 sq. ft only. However, the title

deeds of the residual area were not handed over to the

Board. The construction was completed by the Board.

4. For whatever be the reasons, the parties have

entered into third building agreement on May 31, 1980.

The recitals in the agreement disclose that certain

complications and disputes arose between the parties

after execution of the earlier two agreements resulting

in litigation between the parties which were pending as

on the date of third building agreement. In the third

building agreement it is inter-alia stated that "on the

request of the depositor vide their letter of May 1,

1980, expressing their desire to take the entire

Complex building on the following terms and conditions

and to end all litigation for all time to come, to which 6

the Board agrees......" Under the said agreement, the

depositor agreed to pay to the Board the total amount

of cost incurred by the Board for construction of

Complex undertaken by it under the first agreement of

February 18, 1975, estimated at Rs.73.50 lakhs

including architectural fee, capitalised interest and

supervision charges. The depositor was required to

pay interest on the principal amount at the rate of 15%

per annum from the date of completion of construction

of the building (i.e. 01.01.1979) upto the date of

payment. The depositor also agreed to repay the

entire loan amount of Rs. 3.50 lakhs paid to it under

the second agreement dated May 4, 1977 with interest

at the rate of 10= % till the date of repayment.

5. The dispute centers around the interpretation of

Clause 4 of the agreement and it may be just and

necessary to notice the same in its entirety.

" Clause 4: That the depositor agrees to pay the entire aforesaid amount of cost, loan and interest on execution of this agreement not later than 31st October, 1980, failing which 7

this agreement shall be deemed to be cancelled."

The agreement further provides that as soon as the

aforesaid amounts are paid in full, the parties were

required to take follow up action and withdraw all suits

and appeals filed by the parties that were pending in

courts and as well as before Property Administrator,

M.P. Housing Board. The Board was required to hand

over possession and the title deeds by duly declaring

the depositor as the owner of the Complex. It was

expressly provided that all such provisions of the

previous two agreements which were inconsistent with

the third agreement shall be deemed to be ineffective.

6. It is an admitted fact that the depositor did not

comply with Clause 4 of the third agreement which

required the payments to be made by 31st October,

1980. It is equally an admitted fact that the depositor

made certain representations to the Board that they 8

were willing to perform their part but were unable to

do so for want of proper accounts and other details

from the Board and thus required further time for

payments of the amounts under the third agreement.

Exchange of correspondence in that regard between

the parties went on till 1986.

7. Since the parties failed in arriving at any agreed

settlement, the Board filed Suit No.2A/87 before the

court of IInd Additional Judge, Bhopal for permanent

injunction seeking a restraint against the depositor

from disturbing their possession of the land and

building and also sought a further restraint order

restraining the depositor from demolishing sheds

constructed by the Board. The court granted a

temporary injunction. The depositor filed Misc. First

Appeal in the High Court challenging the order of

temporary injunction granted by the trial court. The

High Court vacated the temporary injunction order. 9

The Board thereafter filed a comprehensive Civil Suit

bearing RCS No.8A/90 in the court of IInd Additional

District Judge, Bhopal for declaration, Specific

Performance of the Contract and Permanent Injunction.

The learned trial court referred the disputes arising out

of RCS No. 8A/90 (New No.63-A/94) and Regular Civil

Suit No.2A/87 (New No. 16A/94) to the sole arbitrator

Shri Justice K.K. Dubey (Retired) for determination of

disputes. The said cases were registered before the

arbitrator as Reference Case No.1/95 and Reference

Case No.2/95. The arbitrator by his award dated

September 23, 1998 granted the following reliefs :

"1. The board shall give immediate possession of the building to the society. This should be done within a week of the award being made the rule of the Court.

2. The board shall be entitled to a sum of Rs.37,70,309-87. Half of this amount shall be paid by the society as soon as the award is declared the rule of the court. The rest of the amount shall be paid in monthly installments of Rs.2.4 lakhs from the monthly rental income of the building. If there is any shortfall in the realization of the rent, it shall be made good by the society.

10 This amount shall be receivable by the board by the end of the month. In case of any default, the board shall be entitled @ 18% per annum capitalized quarterly.

3. There shall be no interest payable to the board for the interim period, that is, after passing of this award and the decree of the court making this award the rule of the court.

4. As regards unrealized rent, the parties shall enter into an agreement to the effect assigning the rental debt to the board.

5. Both the parties shall take steps to withdraw all cases against each other before the court and before other authorities.

6. The relief of specific performance of the third agreement dated 31-5-80 as prayed by the society has been allowed subject to the relief under this award."

8. Being aggrieved by the award passed by the

arbitrator, the Board initiated appropriate proceedings

for setting aside the award passed by the arbitrator.

The trial court confirmed the award passed by the

arbitrator against which the Board preferred appeals

under Section 39 of the Arbitration Act, 1940 (for short 11

`the Act'). The High Court dismissed the appeals

preferred by the Board. Hence the present Special

Leave Petition.

9. Leave granted.

10. The present appeal is directed against the common

judgment and order dated July 27, 2006 passed by the

High Court of Madhya Pradesh judicature at Jabalpur

whereby the High Court dismissed the appeals of the

appellant filed under Section 39 of the Act.

11. Shri L.N. Rao, learned senior counsel for the

appellant submitted that the award of the arbitrator is

vitiated and required to be set aside. The courts below

have committed a grave error in confirming the award

passed by the arbitrator. The arbitrator has committed

gross misconduct which is apparent from the face of

the record. The arbitrator disregarded the terms of the 12

contract and passed his award on events and

circumstances which were irrelevant for interpreting

the terms of the contract. The award is based on

conjectures and surmises. It was also submitted that

the arbitrator has exceeded his jurisdiction by framing

and deciding issues which were not referred to him by

either of the parties which reflects the predetermined

mind of the arbitrator.

12. Shri C.A. Sundaram, learned senior counsel

appearing for the respondent submitted that the award

does not suffer from any infirmities whatsoever

requiring the interference of this Court in exercise of its

jurisdiction under Article 136 of the Constitution of

India. Learned senior counsel submitted that both the

courts below concurrently found that the award passed

by the arbitrator is just and reasonable and is not

vitiated by any act of misconduct on the part of the

arbitrator. The findings so recorded by the courts

below by no stretch of imagination could be 13

characterised as perverse and that being the position,

there is no scope for any interference with the award.

13. Shorn of all the details and embellishments, the

crucial question that arises for our consideration is

whether the third building agreement dated May 31,

1980 stood automatically cancelled on account of non-

compliance of the terms thereunder by the depositor

and whether the second agreement dated May 4, 1977

stood automatically revived? In order to resolve the

controversy it is just and necessary to make a detailed

analysis of terms and conditions incorporated in the

third building agreement dated May 31, 1980. The

intention of the parties is to be gathered for

determining the scope of the agreement. The third

agreement as is evident from the recitals was entered

into mainly for the purpose of arriving at terms for the

payment of construction cost and other fees payable by

the depositor to the Board. The depositor agreed to 14

pay to the Board the total amount of `cost of Complex'

incurred by the Board for the construction pursuant to

the first agreement dated February 18, 1975. The

amount was quantified at Rs.73.50 lakhs which

included the architectural fees, capitalised interest and

supervision charges etc. The said agreement does not

speak about any transfer of land. There is no doubt

that the depositor agreed to pay the entire amount of

cost of construction, loan and interest payable to the

Board on or before October 31, 1980. The question is

whether non payment results in automatic cancellation

of the third agreement? The nature and scope of the

said agreement is entirely different from that of the

earlier agreements of 18.02.1975 and 04.05.1977

executed by and between parties.

14. Whether time is the essence of the agreement

dated May 31, 1980 :

It is true that Clause 4 of the third agreement provides

that the depositor to make all the payments on or 15

before October 31, 1980 on the pain of cancellation of

agreement. But the question is what are those

amounts that were required to be paid?

15. The arbitrator in this regard upon consideration of

the material available on record found that the

depositor was under confusion and rightly so as to the

amount of actual cost of construction. It was also

found that the amount actually paid to the architect as

his fees and the fees as the Board has included in the

cost of construction was different. The duration of

period of construction was also not clear from the

records produced by the Board. Therefore, the

depositor was not in a position to know the capitalised

interest. It is an admitted fact that the Board had been

realising rents from the lessees of the building. The

same has not been taken into account and it is under

those circumstances the depositor went on requesting

the Board to provide the detailed accounts as regards 16

the actual cost and also details as to the rent collected

by the Board in order to enable them to pay the exact

amount to the Board. The arbitrator found that

despite such request the account books were not

shown to them and in fact the account books were not

maintained in terms of the first agreement. The

arbitrator found that the Board always assured the

depositor that it would provide the details as required

after complete verification as regards the amounts of

cost incurred by the Board for construction of the

building. The arbitrator found that the Board has

realised rents from the building which had not been

set off against the amount of Rs.73.50 lakhs shown in

the agreement as cost of construction. The arbitrator

after taking the sequence of events and

correspondence between the parties even after 31st

October, 1980 into consideration arrived at a

conclusion that the figure of Rs.73.50 lakhs as cost of

construction was tentatively shown in the agreement. 17

16. The arbitrator found that the Board had itself

waived the time clause and was willing to accept

money from the depositor even after 31st October,

1980 as is evident from the negotiations which

continued between the parties till the year 1985-86.

The arbitrator relied on documentary evidence made

available by the parties in arriving at the conclusion

that in the present case the time is not essence of the

agreement.

17. It is fairly well settled that the time is not normally

an essence of any agreement qua immovable

properties and even there was an express covenant of

time being an essence, the overall agreement have to

be looked at to determine whether the time was the

essence. Whether the time is the essence of the

contract would, therefore, be a question of fact to be

determined in each case and merely expression of the 18

stipulated time would not make time an essence of the

contract. The finding arrived at by the arbitrator in this

regard is not even challenged by the Board in the

proceedings initiated by it under Section 30 of the Act.

18. It is fairly well settled and needs no restatement

that the award of the arbitrator is ordinarily final and

the courts hearing applications under Section 30 the

Act do not exercise any appellate jurisdiction.

Reappraisal of evidence by the court is impermissible.

In Ispat Engineering & Foundry Works, B.S. City,

Bokaro vs. Steel Authority of India, B.S. City,

Bokaro [(2001) 6 SCC 347], it is held :

" 4. Needless to record that there exists a long catena of cases through which the law seems to be rather well settled that the reappraisal of evidence by the court is not permissible. This Court in one of its latest decisions [Arosan Enterprises Ltd. v. Union of India (1999) 9 SCC 449] upon consideration of decisions in Champsey Bhara & Co. v. Jivraj Balloo Spg. & Wvg. Co. Ltd. [AIR 1923 PC 66], Union of India v. Bungo Steel Furniture (P) Ltd.[ (1967 1 SCR 324], N. Chellappan v. Secy., Kerala SEB [(1975) 1 SCC 289], Sudarsan Trading Co. v. Govt. of Kerala [(1989) 2 SCC 38], State of Rajasthan v. Puri Construction Co. Ltd. [(1994) 6 SCC 485] as also in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan [(1999) 5 SCC 651] has 19

stated that reappraisal of evidence by the court is not permissible and as a matter of fact, exercise of power to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act. This Court in Arosan Enterprises categorically stated that in the event of there being no reason in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, interference would still be not available unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law.

This Court went on to record that in the event, however, two views are possible on a question of law, the court would not be justified in interfering with the award of the arbitrator if the view taken recourse to is a possible view. The observations of Lord Dunedin in Champsey Bhara stand accepted and adopted by this Court in Bungo Steel Furniture to the effect that the court had no jurisdiction to investigate into the merits of the case or to examine the documentary and oral evidence in the record for the purposes of finding out whether or not the arbitrator has committed an error of law. The court as a matter of fact, cannot substitute its own evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties."

19. Interpretation of a contract, it is trite, is a matter

for the arbitrator to determine. Even in a case where

the award contained reasons, the interference

therewith would still be not available within the

jurisdiction of the court unless, of course, the reasons

are totally perverse or award is based on wrong

proposition of law. An error apparent on the face of 20

the records would not imply closed scrutiny of the

merits of documents and materials on record. "Once it

is found that the view of the arbitrator is a plausible

one, the court will refrain itself from interfering." [see

Sudarsan Trading Co. vs. Govt. of Kerala (1989) 2

SCC 38 and State of U.P. vs. Allied Constructions

(2003) 7 SCC 396].

20. In the present case, on the material available and

upon appreciating the same the arbitrator arrived at

the finding that the time was not of the essence and

the agreement subsisted even after 31st October, 1980.

The finding cannot be said to be perverse to give rise

to legal misconduct deserving intervention under

Section 30 of the Act.

21. In any event, even the time was the essence of the

agreement, the same was not insisted upon by the

parties in the present case. The material available on 21

record disclose that even after October, 1980, parties

continued negotiations as regards the actual amounts

payable based on what the construction cost would be

on reconciliation of accounts and the same would

indicate that the parties were still working out their

rights and obligations under the agreement. The

parties would not have acted in such a manner had the

agreement had come to an end. Be it noted that the

Board never took any stand during the negotiations

that the agreement stood cancelled or took any steps

to terminate the same. It did not raise any objection

contending that the cost of construction was quantified

at Rs.73.50 lakhs after negotiation and verification of

the accounts by the parities to their satisfaction. It

was not the case of the Board that the quantified

amounts towards cost of construction of complex was

non negotiable. It is under those circumstances the

arbitrator accepted the case set out by the depositor

that the Board was always assuring them to furnish the 22

correct figure and the accounts of cost incurred by

them but refused to do so. The arbitrator took into

consideration variety of circumstances in arriving at the

conclusion that the figure of Rs.73.50 lakhs stipulated

in the agreement was tentative and not a final figure.

The arbitrator has fully discussed the issue as to how

the non-payment of the amounts was on account of

the Board's action in not furnishing the accounts even

at the stage of arbitration and, therefore, held that the

Board could not seek to wriggle out of 1980

agreement.

22. The courts below found conclusions drawn and

findings arrived at by the arbitrator that non payment

of amounts by the depositor by 31st October, 1980 as

provided for did not result in automatic cancellation of

the agreement were plausible and accordingly refused

to interfere in the matter. The courts below upheld the 23

findings that the depositor continued to be the owner

of the property.

23. The decision in Swarnam Ramachandran and

Anr. Vs. Aravacode Chakungal Jayapalan, [2004

(8) SCC 689], upon which reliance has been placed by

the learned senior counsel, in our considered opinion,

in no manner, supports the contention advanced

before us. In the said decision the Court took the view

that the time is presumed not to be of the essence of

the contract relating to immovable property, but it is of

the essence in contracts of reconveyance or renewal of

lease. It is further held that whether time is of the

essence is a question of fact and the real test is the

intention of the parties. It depends upon the facts and

circumstances of each case. In cases where notice is

given making time of the essence, it is the duty of the

court to examine the real intention of the party giving 24

such notice by looking at the facts and circumstances

of each case. The intention can be ascertained from:

(i) the express words used in the contract;

(ii) the nature of the property which forms the subject matter of the contract;

(iii) The nature of the contract itself; and

(iv) The surrounding circumstances.

24. The onus to plead and prove that time was of the

essence of the contract is on the person alleging it. In

the present case, the Board never took the plea before

initiating the legal proceedings that the time was of the

essence of the contract. The arbitrator after taking all

the relevant facts into consideration in the present case

found that there was no justification in claiming to

treat time as of the essence of the contract.

25. Mr. Nageshwar Rao, learned senior counsel for the

appellant submitted that amongst the issues submitted

by the parties to the arbitrator there was no issue 25

regarding the non-execution of the contract or with

regard to whether the non-performance of the third

agreement was due to non-supply of accounts by

the Board. The contention was that the arbitrator

himself framed a specific issue, being issue No. 13 to

the effect whether the Board thwarted the fulfillment of

the condition of the payment within the period of time

by not supplying the proper accounts of the costs of

the building, thus, denying the depositor the

opportunity to deposit the amount. The submission

was that the arbitrator exceeded his jurisdiction in

framing such an issue and thus committed grave legal

misconduct. It was submitted that in the present case

both the parties acted in accordance with the terms of

the 1980 agreement and upon admitted failure of the

depositor to pay the stipulated amounts within the

agreed period, the contract stood automatically

terminated and the 1977 contract automatically

revived.

26

26. We cannot accept the contention of the Board that

no additional issue could have been framed by the

arbitrator on his own for its decision. In a reference

made under Section 23, arbitrator's power to

determine the lis between the parties is much wider.

The arbitrator has all the powers which the court itself

would have in deciding the issues in the suit. The

court's power to frame an additional issue if its is just

and necessary for deciding the matter in dispute

cannot be denied and so also of the arbitrator where

disputes between the parties pending adjudication on

suits have been referred to arbitrator for determination

[See: Jugal Kishore Prabhatilal Sharma and Ors.

Vs. Vijayendra Prabhatilal Sharma and Anr. [1993

(1) SCC 114)].

27. In the light of the settled legal principle, we are of

the opinion that the arbitrator was not bound to adopt 27

only the issues submitted by the parties but was well

within his jurisdiction to frame such other issue or

issues as may be just and necessary for the purpose of

disposal of the reference made under Section 23 of the

Act. We accordingly find no merit in the submissions

made by the learned senior counsel that the arbitrator

exceeded his jurisdiction and committed grave legal

misconduct in framing said issue and determining the

same.

28. It is true that the arbitrator took judicial note of

certain facts which were in the realm and conjectures

and surmises to conclude that the second agreement

1977 was entered into under political pressure and

depositor was compelled to execute the said

agreement under such pressure. But the question is

what is the effect of the same. In our considered

opinion even this surmise and conjecture is ignored

and not taken into consideration, the award of the

arbitrator continues to be valid and binding on the 28

parties. The findings recorded by the arbitrator that

the specific performance of the second agreement is

barred by limitation; that the agreement is itself

unconscionable; that the agreement ceases to subsist

after the 1980 agreement and was not revived are not

based on the sole ground that the second agreement

came to be executed under political pressure. There is

enough material available on record to arrive at such

conclusion as the one arrived at by the arbitrator. All

the said conclusions were not arrived solely on the

basis of conjectures and surmises. In Gujarat Water

Supply and Sewerage Board vs. Unique Erectors

(Gujarat) (P) Ltd. and Anr. [1989 (1) SCC 532], this

Court held that "an award of an arbitrator should be

read reasonably as a whole to find out the implication

and the meaning thereof. Even in a case where the

arbitrator has to state reasons, the sufficiency of the

reasons depends upon the facts and circumstances of

the case. The Court, however, does not sit in appeal 29

over the award and review the reasons. The court can

set aside the award only if it is apparent from the

award that there is no evidence to support the

conclusion or if the award is based upon any legal

proposition which is erroneous." The award under

challenge is not the one which is based on no evidence.

29. In Food Corporation Vs. Joginder Pal [ 1989

(2) SCC 347] this Court reiterated the principle that an

award of an arbitrator can only be interfered with or

set aside or modified within four corners of the

procedure provided by the Act. It is not misconduct

on the part of an arbitrator to come to an erroneous

decision, whether error is one of the fact or law, and

whether or not his findings of fact are supported by

evidence. In case of errors apparent on the face of the

award it can only be set aside if in the award there is

any proposition of law which is apparent on the face of

the award, namely, in the award itself or any document 30

incorporated in the award. Errors of law as such are

not to be presumed.

30. Learned senior counsel for the appellant further

contended that the arbitrator in the instant case has

committed grave error in going beyond the terms of

the contract admittedly entered into by and between

the parties. The question is what is the legal

misconduct committed by the arbitrator in the instant

case? Whether the award by the arbitrator perpetrates

gross miscarriage of justice? Is it reduced to mockery

of a fair decision of the lis between the parties to the

arbitration? The erroneous application of law

constituting the very basis of the award and improper

and incorrect findings of fact, which without closer and

intrinsic scrutiny, are demonstrable on the face of the

materials on record, have been held as legal

misconduct rendering the award as invalid but at the

same time the court could not reappraise the evidences

intrinsically with a close scrutiny for finding out that 31

the conclusion drawn from some facts, by the arbitrator

is according to the understanding of the court,

erroneous. Such exercise of power which can be

exercised by an Appellate Court with power to reverse

the finding of fact, is alien to the scope and ambit of

challenge of an award under the Arbitration Act. [See:

State of Rajasthan vs. Puri Construction Co. Ltd.

and Anr. [1994 (6) SCC 485]. In the present case

there is no erroneous application of law by the

arbitrator or any improper and incorrect finding which

is demonstrable on the face of the material on record.

31. It was submitted that when there has been

quantification of the costs of the construction of the

building and incorporation of the same in the third

agreement the same could not be re-determined by the

arbitrator by rewriting the terms of the agreement

entered into between the parties. We find no merit in

the submission. There is no dispute with the

proposition that the intention of the parties is to be 32

gathered from the words used in the agreement. If the

words are clear, there is very little that the Court can

do about it. In the present case, the parties entered

into three agreements one after the another. The

arbitrator while interpreting clause I of the third

building agreement whereunder the figure of Rs.73.50

lakhs being the amount of cost of complex arrived at

the conclusion that the figure has been given by the

Board. The arbitrator upon appreciation of the material

available on record found that the depositor repeatedly

requested the Board to provide the details of accounts

of the cost as also the rent realization in order to

enable them to pay the exact amount to the Board.

The arbitrator after taking all the relevant facts and

circumstances into consideration found that

determination as to the actual cost of the construction

was absolutely imperative to determine the exact

amount payable and found that the figure of 73.50

lakhs as stated in clause 1 of the third agreement was 33

only indicative. The arbitrator derived support from

the numerous documents filed before him which

revealed that the cost of construction was stipulated in

clause 1 of the agreement was tentative, the matter

was kept open till 1990 for settlement of accounts.

Interpretation of the terms of the agreement

concerning the quantification of cost of construction in

the present case, in our considered opinion, does not

amount to rewriting the terms of the contract.

32. The arbitrator having considered the overall

situation and having arrived at a conclusion that the

second building agreement was not enforceable held

that the property would continue to vest with the

depositor. But the arbitrator did not ignore the

legitimate right of the Board to realize the amounts

spent by it for putting up the construction. The

arbitrator considered the matter and worked out a

reasonable, just and fair solution and accordingly held

that the depositor was bound to pay the amounts spent 34

by the Board for construction whether or not they

wanted such a construction to have come up or

whether or not the Board could have expended monies

to pay for the construction without the consent of the

depositor as provided in the 1975 agreement.

33. The arbitrator accordingly passed the award

declaring that the Board shall be entitled to a sum of

Rs.37,70,309.85 and directed the depositor to pay half

of the amount as soon as award is declared a Rule of

the Court. The rest of the amount to be paid in

monthly installments of 2.4 lakhs from the monthly

rental income of the building. In case of any default

the Board shall be entitled to interest @ 18% per

annum capitalized quarterly. Relief granted by the

arbitrator, in our considered view is fair and equitable

one. The arbitrator awarded the amounts towards cost

of construction plus supervision and other charges

payable to the Board together with a hefty interest @ 35

15% compound from the date of expenditure by the

Board till the date of payment.

34. In our considered opinion, there is nothing in the

award requiring intervention by the courts. The courts

below rightly refused to interfere with the award

passed by the arbitrator. It is not a case which

warrants our interference in exercise of jurisdiction

under Article 136 of the Constitution of India.

35. Appeal fails and is accordingly dismissed with no

order as to costs.

..........................................J. (Lokeshwar Singh Panta)

..........................................J. (B. Sudershan Reddy)

New Delhi;

March 20, 2009