M/s.Sudsun Housing Development India Ltd. v. Pradeep Dugar

22. The facts are as under:The petitioner is engaged in the business of promotingflats. They entered into an agreement with the owners ofthe property bearing Door No.42, South Boag Road, T.Nagar,Chennai 17, for the development of the property. Pursuantto the above agreement with the owners of the saidproperty, the owners conveyed by sale undivided shares inthe above said property to the respondents 1 to 7 herein bydifferent sale deeds. Thereafter, the petitioner enteredinto an agreement with the respondents 1 to 7 herein, forputting up construction in the said property. Theconstruction of the building was completed in June 1997 andthe flats were handed over to the respondents 1 to 7 fromJune 1997 onwards. After receiving their respectiveapartments, the respondents 1 to 7 created problems whichnecessitated the petitioner to file a Civil Suit inO.S.No.2544 of 1998 before the IV Assistant City CivilCourt, Chennai. Along with the suit, an application inI.A.No.6250 of 1998 was filed by the petitioner for aninterim injunction and the City Civil Court granted anorder of interim injunction restraining the respondents 1to 7 herein from interfering with the peaceful possessionand enjoyment of basement and the entire terrace area ofthe building. Respondents 1 to 7 herein approached theHigh Court in O.P.No.647 to 653 of 1998 and this court byorder dated 10.12.1999 appointed 8th respondent as the soleArbitrator to resolve the disputes between the parties.3. According to the petitioner, the eighthrespondent/Arbitrator appointed a Chartered Engineer toinspect the building and to submit a report as to whetherthe building was built up according to the approved planand in terms of the Construction Agreement. The Engineerinspected the building on several occasions in the absenceof the petitioner and filed his report without giving anopportunity to the petitioner to present their case. The https://hcservices.ecourts.gov.in/hcservices/ 3petitioner also filed their objections for the report ofthe Engineer, but, it is contended by the petitioner thatthe Arbitrator passed an award on 21.08.2000 in favour ofthe respondents 1 to 7 solely on the basis of the reportfiled by the Chartered Engineer. Aggrieved by the awarddated 21.08.2000 passed by the eighthrespondent/Arbitrator, the petitioner filed the aboveOriginal petition under Sec.34 of the Arbitration andConciliation Act 1996 to set aside the same.4. Respondents 1 to 7 entered appearance through theircounsel and filed a common counter affidavit supporting theaward and seeking to dismiss the petition.5. Heard the learned counsel for the petitioner andthe learned counsel for the respondents 1 to 7. I have alsogone through the entire records including the impugnedaward passed by the eighth respondent/ Arbitrator.6. Before the 8th respondent/arbitrator, respondents 1to 7 jointly filed a Claim petition and also filed separateindividual claim statements in respect of their individualclaims. In the common claim petition filed by themjointly, it was stated that they entered into aConstruction Agreement with the petitioner for theconstruction of their flats and the agreement includes aprovision for providing certain common amenities for thebenefit of the flat owners. According to the respondents 1to 7, the common amenities to be provided include1. Care Taker / Security Room and2. Landscaped surroundings7. They contended that these amenities were notprovided even though they paid for the same. It is statedby the respondents 1 to 7 that the Block of the buildingshould have a basement as per the sanctioned plan for thepurpose of installation of Generator and the ElectricityMain Board. The open terrace, leaving apart a portionexclusively reserved for the 6th respondent's use, shall be https://hcservices.ecourts.gov.in/hcservices/ 4available for the common use of the other flat owners.But, contrary to the undertaking given by them, thepetitioner manipulated the construction of the basement andextended it over and above the area sanctioned in theapproved plan. Instead of providing the Electricity MainBoard and installing the Generator in the sanctionedbasement area, they were installed in the unapprovedportion of the basement. That apart, the petitioner isclaiming ownership over the open terrace portion which wasreserved for the common use and enjoyment of the flatowners.8. Further, the undertaking given by the petitionerherein that they would not violate the sanctioned plan waslater on violated by the petitioner. The suit filed by thepetitioner in O.S.No.2544 of 1998 was resisted by therespondents 1 to 7 by filing an application under Sec.8 ofthe Arbitration and Conciliation Act 1996. After takingpossession, it was stated by the respondents 1 to 7 thatthey noticed several serious defects in the construction,for which, they filed separate claim statements. It istheir further contention that the petitioner has beentaking steps to sell the unapproved basement area to thirdparties. They formed an Association and wrote to thepetitioner on 16.03.1998 pointing out the defects and theworks which have not been carried out by the petitioner. Areply dated 23.03.1998 was sent by the petitioner whereinit was accepted that unapproved portions of the basementarea was measuring about 2884 sq.ft. To stop thepetitioner from selling the upapproved basement area tothird parties, respondent 1 to 7 filed O.A.No.216 of 1999before this court under Sec.9 of the Arbitration andConciliation Act 1996, for an injunction restraining thepetitioner from disposing of the unapproved area in thebasement. This court granted injunction as prayed for andthe application was closed by the High Court, after the https://hcservices.ecourts.gov.in/hcservices/ 5petitioner gave an undertaking that they would not sell theunapproved basement portion to third parties till thecompletion of the arbitration proceedings.9. According to the respondents 1 to 7 herein, thefollowing defects were found in the construction and theyhave to be rectified by the petitioner as per theconstruction agreement:1.Fixing proper granite stones in the entrance as well asin the lobby near the lift and also in the common area.2.Proper provision of lighting in the common area as wellas in the front and side set-back area of the premises;3.Providing window shutters in the staircase windows onthe western side.4.Rectification of the water leakage from the terrace tothe lift area on the third floor;5.Provision of proper storm water drain from the openterrace area so as to prevent flooding of staircase.6.The Corpus fund collected from the respondents 1 to 7were not returned and therefore, the same is to bereturned by the petitioner.10. The respondents 1 to 7 therefore claimed a sum ofRs.10 lakhs towards damages and also for a directiondirecting the petitioner to install the Generator and theElectricity Main Board in the approved area. They alsosought for an injunction restraining the petitioner fromalienating the entire basement area and also for adirection directing the petitioner to rectify the defectsin the construction. Yet another direction was also soughtfor directing the respondents 1 to 7 to pay a sum of Rs.3.5lakhs for not providing the Security/ Care Taker Room,land-scapped surroundings and for further directiondirecting the petitioner to return the Corpus fundcollected from the respondents 1 to 7 for common amenitieswith interest at the rate of 24%. https://hcservices.ecourts.gov.in/hcservices/

611. In the individual claim statements filedseparately, the first respondent contended that theElectrical wiring done by the petitioner was extremely poorand short-circuit and tripping were common. Therefore,another electrician was engaged and the entire electricalwiring was re-done at their cost. The points which were notprovided by the petitioner, were also got done through thesame electrician. Inspite of requesting the petitionerto supply the electric wiring drawings, the petitionerrefused to supply the drawings. It was further pointedout that the petitioner charged a sum of Rs.60,000/- forproviding Open Car park, but, the same was not at allprovided. What was given to them is only a portionearmarked in the plan for the set-back area for parking aSingle Car. Therefore, the first respondent claimed a sumof Rs.2.50 lakhs as damages for not providing covered CarPark, Rs.50,000/- for re-doing the electrical work, Rs.1.50lakhs for not providing fittings and accessories, a sum ofRs.2 lakhs for poor finish and cracks and a sum ofRs.60,000/- for the Open Car Park.12. The second respondent in his separate claimstatement accused the petitioner of providing defectiveelectrical wiring and he also had to re-do the electricalwiring by engaging another electrician. He paid a sum ofRs.75,000/- for providing a open Car park, but, the samewas not provided. Therefore, he claimed a sum of Rs.2.50lakhs for the covered Car Park, Rs.40,000/- for re-doingthe electrical work, Rs.50,000/- for not providing thefittings and accessories and Rs.1.50 lakhs for poor finishand cracks and Rs.75,000/- for Open Car Park.13. Similar claims were individually made by the thirdto 7th respondents respectively.14. The petitioner herein filed a counter statementcommon to all the claim petitions. According to thepetitioner, it was agreed between the parties that the https://hcservices.ecourts.gov.in/hcservices/ 7construction would be made subject to the construction of abasement area which was to be in the exclusive ownership,use and enjoyment of the petitioner. According to thepetitioner, respondents 1 to 7 herein did not state that aSecurity Room and landscaped area have been provided bythem at their own cost to satisfy the claim of Rs.3.50lakhs in this regard. The specific case of the petitioneris that all along the respondents 1 to 7 agreed that thebasement area could be owned by the petitioner and in factthe Association formed by the Flat owners also accepted thetitle of the petitioner to the basement area. It wasadmitted by the petitioner that a portion of the basementarea is an unauthorised construction and steps are beingtaken to regularise the same by C.M.D.A. So far as theterrace area is concerned, it was contended by thepetitioner that there was a clear covenant in favour of thepetitioner to use the terrace area. At no point of time,the petitioner agreed to use and enjoyment of the openterrace by respondents 1 to 7. The petitioner stated thatthey did not try to sell the basement area to thirdparties. Even though it was denied by the petitioner thatthere are no defects, an undertaking was given by them thatthey would be willing to rectify any defect, if any.15. On the basis of the above pleadings, the 8threspondent/Arbitrator framed the following issues:(1)Whether the basement was built in violation of thesanctioned plan by C.M.D.A. ?(2) Whether the respondent has a right to retain a portionof the terrace ?(3)Whether the claimants are entitled to damages asmentioned in prayer No.1 of the claim statement, ifso, what is the quantum ?(4)Whether the respondent is bound to shift and installthe Generator and Electricity Main Board as mentionedin prayer 2 of the Claim Statement ? https://hcservices.ecourts.gov.in/hcservices/ 8(5)Whether the claimants are entitled to an order in thematter of permanent injunction as prayed for in prayerNo.3 of the claim petition ?(6)Whether the claimants are entitled to Rs.3.50 lakhs asdamages for not providing Security/Caretaker room andlandscapped surroundings ?(7)Whether the respondent is liable to return the Corpusfund as claimed in prayer No.6 ?(8)Whether the claimants are entitled to the reliefsought for in Claim VII (A) of para 7 of the amendedclaim statement ?(9)Whether the claimant No.1, Pradeep Dugar and LataDugar are entitled to covered Car Park as claimed intheir claim statement ?(10)Whether the respondent was justified in collectingvarious amounts ranging from Rs.60,000/- toRs.75,000/- from the claimants for providing only openCar Park ?(11)Whether the entire electrical wiring system isdefective and in violation of the contract. If so,whether the claimants are entitled to the damages asclaimed in the respective Claim petition ?(12)Whether the claims are entitled to the amounts asclaimed in their respective Claims statements for notproviding Covered Car Parks ?(13)Whether the claimants are entitled to the amounts asclaimed, towards rectifying the cracks in the walls,and for cost of the repainting and the finish ?(14)To what relief ?16. By consent of both the parties, the Arbitratorappointed a Chartered Engineer to inspect the property andto submit a report. The report of the Chartered Engineerwas marked as Ex-A1. 59 documents were filed on behalf ofrespondents 1 to 7 and 22 documents were filed on behalfof the petitioner herein.17. After evaluating the entire evidence adducedbefore him, the 8th respondent/Arbtirator found that therewas a clear undertaking given by the petitioner herein to https://hcservices.ecourts.gov.in/hcservices/ 9the respondents 1 to 7 that construction would be strictlyin accordance with the approved plan and there would be nodeviation at all. While considering the claim for terrace,the learned Arbitrator after going through Ex.C19 which isa letter written by the Director of the petitioner companyfound that the respondents 1 to 7 are entitled to use andenjoyment of the open terrace on the third floor. InEx.C19, the Director of the petitioner clarified that theterrace immediately above the Type III Flat T2 would bereserved for all the owners of the building excepting theowner of Flat Type III – T1, who is the 6th respondentherein. Thus, the Ex.C19 was not at all repudiated by thepetitioner and therefore on that basis, the learnedArbitrator came to the conclusion that the open terraceexcluding the area reserved for the 6th respondent herein isavailable for the common use and enjoyment of all otherrespondents and the petitioner cannot put any restrictionson their enjoyment of the open terrace. This findingarrived at by the learned Arbitrator is purely on the basisof the evidence adduced before him and the reasons given byhim for arriving at this finding are reasonable and cogentand therefore, the same cannot be assailed before thiscourt under Sec.34 of the Arbitration and Conciliation Act1996.18. While considering the basement area, theArbitrator found that the basement area is more than thearea approved by the C.M.D.A. The report of the CharteredEngineer in Ex.A1 was considered in this regard. The areaapproved by the C.M.D.A. is 1036 sq.ft., but, what wasconstructed is, 3926 sq.ft. There is no doubt that theGenerator and the Electricity Main Board are to beinstalled in the portion of the approved basement area.But, it was not installed in the approved area, but, in theunapproved area measuring about 2890 sq.ft. Thisunapproved construction was already admitted by the https://hcservices.ecourts.gov.in/hcservices/ 10petitioner in their counter statement. Because of this,the learned Arbitrator observed that the petitioner was notin a position to explain why and how the basement area wasenlarged in total violation of the agreement and alsowithout the knowledge of the respondents 1 to 7.19. The Arbitrator made it very clear that theGenerator and the electricity main board were installedagainst the conditions contained in the constructionagreement. After going through the agreement and the otheraccompanying facts, the Arbitrator is of the opinion thatthe basement as per the approved plan, absolutely belongsto the respondents 1 to 7 and other flat buyers. Thatapart, after going through Ex.C13 which is the letterwritten by the respondents 1 to 7 dated 16.03.1998objecting to the sale of the unapproved basement area andEx.C14 which is the reply sent by the petitioner and alsoEx.R14 which is the letter dated 26.6.1997 written by thethird respondent and Ex.R15 which is the letter dated26.6.1997 written by the 4th respondent, came to theconclusion that the respondents 1 to 7 are the exclusiveowners in so far as the basement area is concerned and thepetitioner cannot have any right to make any claim withregard to the basement. This finding is also a purefactual finding which is based on the evidence adducedbefore him and I do not find any grounds to interfere withthe same.20. While considering the Issue Nos.9 and 12 together,which are the claims for not providing Open and Covered CarParks, after going through the evidence, the Arbitratorfound that the petitioner was bound to provide a CoveredCar Park as per the construction agreement and the cost ofit has been calculated and collected. Ex.C44 is theconstruction agreement of the respondent-5 wherein it wasstated that for Open Car Park, the flat buyers paid at therate of Rs.60,000/- each. But, the 5th respondent has not https://hcservices.ecourts.gov.in/hcservices/ 11claimed in his claim statement refund of the amount paid byhim for the Covered Car Parking. In the constructionagreement, the actual cost of providing Covered Car Parkhas not been mentioned. The petitioner could only say thatthe cost of constructing one Car Park would be aboutRs.96,350/-. On that basis, the learned Arbitrator raiseda valid point that if the 5th respondent got a refund ofRs.96,350/- for each Covered Car Park, then how thepetitioner could deny an identical amount as demanded byother respondents for not providing Covered Car Park as perthe agreement. Therefore, the Arbitrator held that each ofthe flat buyers, excepting the 5th respondent, would beentitled to a sum of Rs.96,350/- as cost of the Covered CarParking not provided for and paid for by them.21. While dealing with the question of Open Car Park,the Arbitrator found that it is also included in theconstruction agreement, but, it was not provided at all.The Arbitrator did not accept the contention of thepetitioner that the side set back areas and the rear setback areas could be used as Car park areas. The Arbitratorobserved that the set-back area is a part of the commonarea and after going through Ex.C34, the Arbitrator foundthat a sum of Rs.60,000/- is added to each one of theindividual flat buyers. Further, the Arbitrator found thatfor the respondent-2, Rs.75,000/- was collected (Ex.C24)instead of Rs.60,000/- and therefore, the Arbitrator heldthat the second respondent is entitled to receive a sum ofRs.75,000/-, whereas the other respondents are entitled toreceive a sum of Rs.60,000/-, for not providing the OpenCar Park.22. The above said finding arrived at by theArbitrator are well founded, reasonable, and logical andtherefore, this court cannot interfere with the same whileexercising its powers under Sec.34 of the Arbitration andConciliation Act 1996. https://hcservices.ecourts.gov.in/hcservices/

1223. While considering the question of damages claimedby the respondents 1 to 7 (issue No.6), the Arbitratorfound through Ex.A1 that the Care Taker/Security Room,Common Toilet and land-scapping surroundings have not beenprovided even though it is clearly stated in theconstruction agreement. The Arbitrator referred to itemNos.20 to 22 of the construction agreement in this regard.As the claim of Rs.3.50 lakhs estimated by the respondents1 to 7 was not disputed by the petitioner, the Arbitratorawarded a sum of Rs.3.50 lakhs as a lumpsum for notproviding the Security/Care Taker Room. This is also afactual finding which is reasonable and logical andtherefore, this court cannot interfere with the same.24. While considering Issue No.7 which is the claimfor returning the Corpus Fund, the Arbitrator found thatunder the construction agreement, the deposits made by theflat buyers towards the Corpus Fund are liable to berefunded to the Association formed by the flat buyers aftercompletion of the flats. Ex.C22 was specificallyconsidered by the Arbitrator in this regard whichspecifically provides that the petitioner undertook to handover the maintenance amount deposits to the flat buyersafter deducting any amount for expenses incurred. Afterfinding that 12 months period expired on 14.04.1997, theArbitrator took that date on which the Corpus fund ought tohave been returned by the petitioner. Therefore, theArbitrator directed the petitioner to return the Corpusfund with interest at the rate of 12% per annum from14.04.1997.25. This is a very clear and reasonable finding basedon the evidence and the same cannot be interfered with atall.26. While considering issue No.13, the Arbitrator onthe basis of the undertaking given by the petitioner torectify the defects, directed the petitioner to rectify https://hcservices.ecourts.gov.in/hcservices/ 13within a period of three months from the date of the award.27. While considering the damages claimed forRs.10,00,000/- (Rupees ten lakhs only) (Issue No.3), theArbitrator awarded Rs.10,000/- to each of the respondentstowards damages.28. From the above, it is very clear that a reasonedaward has been passed by the Arbitrator on the basis of theevidence adduced and therefore, I hardly find any groundsenumerated under Sec.34 of the Act 1996 to interfere withthe same.29. It was mainly contended on behalf of thepetitioner that the Chartered Engineer appointed by theArbitrator took sides with the respondents 1 to 7 whovisited and inspected the property on three occasionswithout the presence of the petitioner. Therefore, thereport is a biased one and the entire award has been passedby the learned Arbitrator only on the basis of the biasedreport of the Chartered Engineer.30. I am unable to accept these submissions made onbehalf of the petitioner.31. First of all, out of the five visits made by thechartered Engineer, on two occasions, both the parties werepresent. After the final report was submitted by theChartered Engineer, objections were also filed by thepetitioner before the Arbitrator. The award also revealsthat the learned Arbitrator has not solely relied on thechartered Engineer's report alone to pass the award ascontended by the petitioner. In fact, the learnedArbitrator has considered the entire evidence adducedbefore him and gave findings independently on the basis ofthe evidence with clarity and cogency. Even assuming thatthe Chartered Engineer's report is bad, as the Engineervisited the spot on three occasions without the presence ofthe petitioner, still that cannot be a ground under Sec.34of the Act 1996 to interfere with the award. https://hcservices.ecourts.gov.in/hcservices/

1432. In the result, I have no hesitation in upholdingthe Award and consequently, the Original petition isdismissed. No costs. The connected miscellaneouspetitions are also closed.Sd./- S.R.J.12.03.2009//Certified to be true copy//Dated at Madras this the day of 2009.COURT OFFICER(O.S.)From 25th Day of September 2008 the Registry is issuingcertified copies of the Orders/Judgments/Decrees in thisformat.