Delhi High Court affirms arbitral award denying specific performance but upholds Rs.1.65 crore damages and interest

A bench of Justice Anil Khetarpal and Justice Amit Mahajan heard an appeal arising from FAO(OS)(COMM) 246/2023 in which the owner of development land challenged the Single Judge’s dismissal of a Section 34 petition that had sought to set aside an Arbitral Award dated 20.11.2020. The appeal concerned whether the arbitral tribunal and the learned Single Judge erred in (i) refusing specific performance of a collaboration agreement for construction of a property in Ishwar Nagar, New Delhi, and (ii) awarding Rs. 1.65 crores as damages with pre‑ and post‑award interest.

The High Court upheld the arbitral award and dismissed the appeal. The Court held that the scope of interference under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 was narrowly confined and did not permit re‑appreciation of evidence or substitution of the tribunal’s plausible view. The bench observed that the learned Sole Arbitrator reasonably concluded that specific performance was inappropriate because the contract required continuous supervision and was not amenable to effective court supervision, and that the owner’s termination of the agreement was illegal, entitling the developer to damages. The Court, in its reasoning, observed: “Both Sections 34 and 37 of the Act of 1996 are structured to ensure minimal judicial interference with the Arbitral Awards, in order to preserve the time-efficient and expeditious nature of arbitration as an alternative dispute resolution mechanism. Consequently, the Court is precluded from re-appreciating evidence, re-assessing factual findings, or sitting in appeal over the Arbitrator's interpretation of the contract, so long as the view adopted by the Arbitrator is a plausible one founded on the material available on record. Interference is permissible only on the limited grounds statutorily enumerated in Section 34 of the Act of 1996, including where the award is in conflict with the public policy of India or is vitiated by patent illegality going to the root of the matter, and even then, re-appreciation of evidence is expressly impermissible.”

Background
The dispute arose from a Collaboration Agreement dated 07.11.2011 for development of a 1,148 sq. yd. plot. The developer (claimant before the arbitrator) agreed to bear construction costs and pay the owner (respondent before the arbitrator) staged consideration aggregating Rs. 5.20 crores. The owner was to obtain building plan sanction within 60 days. The claimant alleged that after an initial payment of Rs.50 lakhs the owner delayed getting sanction and later purported to terminate the agreement by a notice dated 22.03.2014, returning a photocopy of the cheque for Rs.50 lakhs. The owner contended that the claimant had failed to furnish credentials and that the agreement was unregistered and unenforceable amid internal corporate disputes.

The claimant invoked arbitration and sought specific performance or, alternatively, damages and refund. During arbitration the parties recorded a settlement on 18.09.2017 but the tribunal declined to pass a consent award because the owner could not produce a Board resolution authorising the compromise; the tribunal proceeded on merits. By the award dated 20.11.2020 the arbitrator refused specific performance under Section 14(c) of the Specific Relief Act, 1963 on account of the continuous supervisory obligations involved, but held the collaboration agreement valid and enforceable and found the termination illegal. The tribunal awarded Rs.1.65 crores with interest and litigation costs. The Single Judge dismissed the challenge under Section 34, and the owner appealed under Section 37.

The High Court reviewed the limited appellate scope and relied on Supreme Court precedents emphasizing restraint in interfering with arbitral awards. It accepted the tribunal’s factual findings — including delayed application for sanction and failure to prove bona fide steps by the owner — and endorsed the tribunal’s use of the mutually agreed settlement figure as the best evidence of quantification where parties had adopted that sum in arbitration proceedings. The court quoted that “the scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred,” and found no patent illegality or conflict with public policy. The appeal was dismissed and the award and the Single Judge’s judgment were affirmed. No interim directions or further liberties were recorded.

Case No.: FAO(OS) (COMM) 246/2023
Case Title: M/S Millenium Realtech Pvt. Ltd. V. M/S Opaque Infrastructure Pvt. Ltd.
Appearances: 
For the Petitioner(s): Mr. Jugal Bagga, Mr. Sumit Kaushik, Mr. Charanjit Khatana & Mr. Chet Ram Kaushik, Advs.
For the Respondent(s): Mr. Harish Malhotra, Senior Advocate with Mr. Rajender Agarwal and Mr. Anoop Kumar, Advs.

Source: 2026 CaseBase(DEL) 63