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TMI Blog2004 (4) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... executed on 5-8-1997. In a family arrangement that took place in the year 1957, the immovable property fell to the share of the appellant, then, a minor represented by his father S.N. Narasinga Rao, natural guardian. 3. On 27-9-1982 the said S.K. Narasimha Murthy along with his son S. Narasinga Rao and the grand son, the appellant herein executed a joint development agreement (for short 'Agreement') with the 1st respondent M/s. Turnkee Constructions Pvt. Ltd. (for short the 'Builder') permitting the 1st respondent to put up residential apartments on the said immovable property on terms and conditions as set forth in the agreement. In terms of the agreement, the appellant was entitled to 34% of total built up area, 4 car garages and furniture and fixtures valued at Rs. 66,000, in lieu of the appellant transferring 66% of the undivided right, title and interest in the immovable property in favour of the 1st respondent builder or its nominees. Time being the essence of the contract, the builder was required to complete the construction within a period of two years from the date of handing over of vacant possession of the immovable property i.e., in any event not later than 10-6-1992 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s impleaded the official liquidator as party respondent in both the appeals, pursuant to the order of this Court dated 13-10-2002 passed on IA No. III. 6. These appeals were heard and reserved for judgment on 19-8-2003. Before the judgment could be delivered, IA-I of 2003 was filed on 23-9-2003 by five persons claiming to be the purchasers of the apartments constructed upon the said immovable property and falling to the builders share of apartments, to be impleaded as party respondents in these appeals, to which the appellant filed his statement of objections on 3-12-2003. 7. Smt. Shwetha Anand the learned counsel for the appellant would contend that the impugned order of the Civil Court is vitiated on account of perversity, as it had failed to notice that the interim award was one beyond the jurisdiction of the arbitrator, under the Act and more so, in the absence of the main issues in the arbitration being tried and dispose off or a specific agreement in relation thereto. Elaborating on the said contention, she would point out to the issues framed in the arbitration proceedings all of which relate to the claims of the appellant to be put in possession of 34 per cent of the buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case. 10. Sri Mohammed Ather, learned counsel for the impleading applicants seeking an order to allow IA-I of 2003, would contend that with reference to Clause 13 of the agreement and paragraph 4 of the affidavit accompanying the application, the builder, empowered by a Power of Attorney executed by the appellant entered into agreements to sell the apartments fallen to its share, in favour of the applicants and put them in physical possession of the same, on obtaining the occupancy certificate on 20-4-1992. He would further contend that the interim award being in favour of the impleading applicants, they need to be heard in the appeal. In that view of the matter, the impleading applicants are necessary parties to the proceedings and any order made by this Court, it is contended, may adversely affect the interest of the impleading applicants. In addition, he would contend that the appellant has since instituted Original Suit alleging that the impleading applicants are trespassers, etc. and requests this Court to order maintaining of status quo regarding their possession of the apartments until the Arbitrator decides the main disputes. 11. Smt. Shwetha Anand, would veheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the builder or his nominees. 14. At the stage of delivery of possession of the appellant's share of built area, covered car parking spaces, furniture and fittings, certain, differences and disputes arose between the appellant and the builder, with regard to the exact built up area in terms of square feet, the quality of construction, deviation from the agreed specification etc., which, the parties, mutually agreed to have the differences and disputes resolved through process of arbitration, by Shri D.M. Chandrashekar, Retired Chief Justice of this Court, as the sole arbitrator, by invoking clause 21 of the agreement. The arbitrator entered upon reference on 6-12-1993 and in the premise of the pleadings of the parties, framed as many as 19 issues touching upon the obligations of the builder in fulfilling the terms of the agreement as also certain claims of the sisters of the appellant to a share in the built up area. The disputes did not relate to the appellant's obligation of conveyance of the 66 per cent of the undivided interest in the land in favour of the builder. The issues 5 and 6 are relevant for the purpose of these appeals, which are as under :- "5. Are the Clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by his order dated 23-8-1995, on an assumption that the disputes between the parties included the obligation of the appellant to execute the sale deeds, overruled the objection of the appellant that such execution, arises only after due compliance of the conditions and obligations under Clause 11 of the agreement, directed the appellant to execute six sale deeds in favour of the nominees of the builders, by going over to the office of Kesvy and Co., Advocates for the builder and thereafter to the Sub-Registrar's office for registration of the deeds of sale on 14-9-1995. The relevant portion of the objections of the appellant, as recorded by the Arbitrator in the said order is as follows : "Shri Narasinga Rao next contended that the built up area conveyed by the respondent to the claimants was less than that what they are entitled to under the terms of the Agreement dated 27-9-1994 and that until the respondent fulfils its obligation in this regard, the claimant cannot be asked to execute these 6 sale deeds." 19. In the interim award dated 10-10-1995, the arbitrator, recorded the objections of the appellant as at paragraphs 13 and 14, as follows : "13. Shri Narasinga Rao had also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the area equivalent to 34 per cent of total built area. It is the specific case of the appellant, that the builder has not completed in all respects the apartments fallen to his share, in addition to a shortfall in terms of square feet of the built area equivalent to 34 per cent of the total built area. The appellant's case is his entitlement to 34 per cent of the covered car parking space and fittings and fixtures valued at Rs. 66,000. The denial of the claims of the appellant by the builder has resulted in the arbitration proceedings. The issues framed by the arbitrator relate to only the claims of the appellant. 25. It was not open for the arbitrator to ignore Clause 11 of the agreement to which both the parties were bound. By eschewing the same in the decision making, the arbitrator acted beyond the jurisdiction conferred on him. It is well-settled law that the arbitrator derives the authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one. This deliberate departure from the contract amounts not only to manifest disregard to the authority or misconduct on his part, but it may tantamount to mala fide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld which reached the customer, being an act beyond the scope of his reference, in eliminating an important factor in calculation of the formula. The Apex Court held that the said action of the arbitrator could be looked upon as an error of law apparent on the face of record. 28. In support of the contention of the learned counsel for the appellant that the arbitrator had committed a misconduct, reliance placed on the decision of the Supreme Court in the case of Tarapore & Co. (supra), in the circumstances is apposite : "If an authority would lack jurisdiction in the sense that the subject-matter is not amenable at all to its decision, i.e., the case be of patent lack of jurisdiction, acquiescence of the parties would not be material inasmuch as by agreement jurisdiction cannot be conferred. If a challenge is made to the award on the ground that the arbitrator has no jurisdiction, the only way to test the correctness is to look into the agreement itself because the jurisdiction of the arbitrator flows from the reference and a reference can be only with regard to such disputes which are contemplated by the agreement." (p. 522) 29. The Apex Court, having considered all important e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute is between the appellant, being the owner of the immovable property and the 1st respondent builder, in terms of the agreement dated 27-9-1982. The questions involved in the present appeals have no bearing on the disputes/obligations arising out of the agreements ended into by the builder with the impleading applicants to sell its share of the built area. The question of execution and registration of sale deed conveying 66 per cent undivided interest of the immovable property in favour of the appellant or his nominees, would arise only if the conditions in Clause 11 of the agreement are fulfilled by the builder. The subject-matter of the arbitration is with regard to the non-fulfilment of the conditions by the builder and therefore, the contentions of the impleading applicants are liable to be rejected at this stage. In this view of the matter, the impleading application is dismissed. 31. Having held the impugned interim award invalid and one without jurisdiction, the necessity to consider the contention advanced by the learned counsel for the appellant with regard to the period within which the arbitrator was required to pass the award, does not arise. 32. We are informe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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