Mudhit Gupta And Another v. Sussanne Khan, Sole Proprietor Of Sussanne Khan House Of Design .

S.C. Gupte, J.:— Heard learned Counsel for the parties. This Commercial Arbitration Petition challenges an award passed by a Sole Arbitrator in a dispute arising out of a contract of hire of professional services for interior and architecture design.

2. The Petitioners are engaged in the business of real estate development, whereas the Respondent is a sole proprietress of an architecture and interior design firm. The Petitioners proposed to construct 12 villas in Goa. The Respondent agreed to provide designs of the villas including general layout for the entire complex with architectural drawings as well as interior design drawings for the villas to be constructed by the Petitioners. For the professional services rendered by the Respondent, the Respondent was to be paid a total fee of about Rs. 6 crores. The fee was payable in two phases. The first phase provided for three milestones and three installments accordingly. The first was an advance required to start architectural drawings, requiring payment of Rs. 67,41,600/-; the second was on submission of architectural drawings for all types of villas including the walk thru so as to start interior design drawings and was also in the sum of Rs. 67,41,600/-. The third and the last installment in the first phase was to be made on submission of interior design drawings including rendering in 3D and aggregated to Rs. 33,70,800/-. A total amount of Rs. 1,68,54,000/- was thus due and payable as the first phase fee under the contract. There is no dispute between the parties that this amount was duly paid by the Petitioner to the Respondent. The dispute between the parties concerns the second phase of fees payable under the contract. The table of second phase of fees provides for 24 installments each of Rs. 21,06,750/-, the first of which was to start on execution of interiors for the first villa, the second upon completion of the interiors of the first villa, the third on starting the interiors of the second villa and fourth upon completion of the interiors of the second villa and so on, till completion of the interiors of all 12 villas. A total sum of Rs. 5,05,62,000/- was payable under the second phase of fees payable under the contract. The contract contains a stipulation that in the event the designs of villas constructed on the property were executed by the Petitioners or any contractor hired by them not using the Respondent's design, then the architectural and design fees were stipulated to be Rs. 2,52,81,000/- (to be paid as fees for the second phase) over and above the fees paid in the first phase. The contract stipulated the manner of payment of the second phase fees in such a case. The second phase fees in such a case were payable in two installments, the first on or before 01.03.2014 and the second on or before 01.05.2014 (each of Rs. 1,26,40,500/-). The contract contains a further stipulation that in a case where the execution of the villas is undertaken by the Petitioners or any contractor other than the contractor engaged by the Respondent, then the Respondent shall provide all drawings (including working drawings), for execution of the villas and their interiors, assist in the sourcing of material and make necessary changes, if any. It has been the grievance of the Respondent that while the work on the project was progressing from her end, the Petitioners addressed a communication to her stating that the Petitioner had lost confidence in the contractors appointed by her on account of delay in the project. It was the case of the Respondent that by that time, the design concept of six villas had been completed and remaining was to be done as and when the construction of the villas was to be carried out. It was the Respondent's case that the Petitioners appointed another agency for execution of the project in place of the contractors appointed by her and also another interior designer in her place. It was the case of the Respondent that the Petitioners were using original artistic work and designs created by the Respondent in respect of the project and carrying out the execution of the project through another contractor. It was the Respondent's case that the Petitioners had failed to pay to the Respondent the stipulated sum of Rs. 2,52,81,000/- under the agreement as second phase fees in the event the execution work of the project was undertaken by the Petitioners through any contractor other than the Respondent's contractor. The Respondent, in the premises, moved an application under Section 9 of the Arbitration and Conciliation Act, 1996 proposing to invoke the arbitration agreement between the parties. At the hearing of that application, the parties agreed to refer their disputes to the arbitration of the Sole Arbitrator herein, treating the application under Section 9 as an interim application under Section 17 of the Act before the learned Arbitrator. By his impugned Award dated 04.05.2018, the learned Arbitrator allowed the Respondent's claim for a sum of Rs. 2,31,74,250/- along with interest at the rate of 18% per annum from 25.07.2015 (i.e. the date of termination) till the date of the award and further interest at the rate of 18% per annum from the date of the award till payment or realisation. In addition, the Arbitrator awarded costs of Rs. 6,00,000/- (towards fees of the Arbitrator paid by the Respondent on behalf of petitioner) and general costs of Rs. 70,00,000/-. This Award is in challenge in the present commercial arbitration petition.

3. It is submitted by Mr. Nankani, learned Senior Counsel appearing for the Petitioner, that the impugned award falls foul of clause a(iv) of Sub-Section (2) of Section 34 inasmuch as the Sole Arbitrator has awarded a sum well beyond the pleadings of the Respondent (original Claimant). clause a(iv) of Sub-Section (2) of Section 34 deals with a case where the Arbitral award deals with a dispute not contemplated by, or not falling within, the terms of submission to the arbitration or contains a decision on matters beyond the scope of submission. The Arbitration agreement between the parties, considered in the light of the order of reference of the dispute to arbitration, and the statement of claim filed by the Respondent before the learned Arbitrator read in the light of the award passed, do not indicate that the learned Arbitrator has dealt with any dispute not contemplated by, or not falling within, the terms of submission or rendered any decision on any matter beyond the scope of the submission. The submission to the learned Arbitrator was of a claim for payment of the second phase fees in a case where the project was executed by the Petitioners through a contractor other than the contractor of the Respondent. That was the very dispute, which was considered by the learned Arbitrator, and the Award contains a decision on this very dispute. There is nothing, therefore, to suggest that the award is in breach of clause a (iv) of sub-section (2) of Section 34.

4. Learned Senior Counsel for the Petitioners in the alternative submits that, at any rate, the impugned award was rendered by the Arbitrator by converting a claim for damages into a claim for specific performance of the contract. Learned Senior counsel submits that this could not have been done, since there was no requisite pleading in support of readiness and willingness of the Respondent or her contractors to perform their part of the contract. Learned Senior Counsel submits that this approach of the learned Arbitrator amounts to a patent illegality within the meaning of sub-section (2-A) of Section 34 of the Act. I am afraid the argument of specific performance was not something which was brought by either the Respondent or by the sole Arbitrator on his own. The Respondent's case before the Arbitrator was that the payment of Rs. 2,52,81,000/- was due on basis of a contractual stipulation which provided that in the event of the execution of the work of the villas being undertaken by the Petitioners through any other contractor, the amount was due and payable by the Petitioners to her. It was, on the other hand, the Petitioners' case before the Arbitrator that the sum of Rs. 2,52,81,000/- was coupled with an obligation on the part of the Respondent to provide all drawings and designs and assist in sourcing material and make necessary changes in the plans and designs and that she had not pleaded her willingness to comply with this obligation. It is in this context that the Petitioners submit that on the principle or the legal basis for grant of specific performance, the Arbitrator could not have awarded payment of Rs. 2,52,81,000/-. The Petitioners' contention is that, in the first place, there was want of pleading, in support of readiness and willingness and secondly, any grant of specific performance would have required the claimant to comply with her obligation under the contract and that this would have required continuous monitoring and on that count also, specific performance could not have been granted. Learned Counsel for the Petitioner submits that the evidence on record also bears out that this was the understanding of the Respondent herself. In the context of these submissions, the learned Arbitrator considered the case from the standpoint of Section 16(c) of the Specific Relief Act. That does not mean that the relief granted by learned Arbitrator was in the nature of specific performance of the contract. In fact, the learned Arbitrator in his award has come to a clear finding that the drawings/designs/plans, as required under the agreement, up to the date of the termination, were supplied by the Respondent to the Petitioners. The learned Arbitrator also has found that after terminating the agreement between the parties, the Petitioners were executing the construction work of the villas through another contractor and in the premises, the second phase fees of Rs. 2,52,81,000/- were payable by the Petitioners to the Respondent under the contractual stipulation referred to above. These are all matters of interpretation of the contract. The interpretation of contract is a mixed issue of law and fact. Even if the learned Arbitrator has erred in appreciating the evidence for the purpose or in applying law to the evidence found on record that does not amount to a patent illegality within the meaning of sub-section (2-A) of Section 34 of the Act, particularly considering the proviso to sub-section (2-A).

5. Looked from any point of view, the impugned award does not disclose any error, much less an error or illegality appearing on the face of the award. The view taken by the learned Arbitrator is a possible view, which is supported by evidence. None of the grounds of challenge within the framework of Section 34 of the Act is made out in the present case. Accordingly, the award deserves no interference at the hands of this Court.

6. In the premises, there is no merit in the Commercial Arbitration Petition and the same is dismissed.