Neelam Jain & Another v. Tej Singh Verma

1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) challenging the Arbitral Award dated 25.05.2010 passed by the learned Sole Arbitrator.

2. It is the case of the petitioners that by an Agreement to Sell dated 15.11.1996, the petitioners had purchased from the respondent, the basement floor admeasuring approximately 17’x54’ sq. ft. of property bearing no. 8/972, in Khasra No. 78 at Govindpuri, Kalkaji, New Delhi- 110019 (hereinafter referred to as the ‘subject property’) for a total sale consideration of Rs.2,90,000/-. It was specifically warranted in the Agreement to Sell by the respondent that the subject property is free from all sorts of encumbrances. Clause 3 of the Agreement to Sell provides as under: - “3. That the First Party has assured the Second Party that the said basement is free from all sorts of encumbrances i.e. mortgages, court injunctions, attachments, disputes, gifts, wills, exchanges etc. and if it is ever proved otherwise the First Party shall be liable and responsible for the same.”

3. At the time of the handing over of the possession to the petitioners, the construction of the upper floors of the building was still going on. The same resulted in reduction of the frontage of the basement, which was supposed to be 17ft., to 8ft. on account of construction of staircase to the above floors. The frontage got further reduced to 5 1/2 ft. when the upper ground floor was sold to a third party and some stairs were constructed for the ingress and egress from the shop located on the ground floor.

4. The petitioner further claimed that the respondent misrepresented the total plot area of the building which was, in fact, constructed on a certain portion of encroached Government land. It was stated that the building has been constructed on 330 sq. yds., whereas the respondent himself, in his property tax returns filed in 2004, had shown the plot area to be 214 sq. yds. In the year 2006, the Public Works Department (in short, ‘PWD’), vide a notice dated 29.05.2006 informed that the building was constructed upon encroached Government land and, therefore, the staircase leading up to the basement of the property was liable to be demolished. Later, due to the construction of the road by the PWD, the ingress and egress from the basement floor was almost completely blocked, as is evident from the photographs that have been filed before the learned Arbitrator.

5. The petitioners also claimed that there were leakages in the sewage pipe in the portion occupied by the respondent, causing severe damages to the goods of the petitioner. In spite of the request, the respondent refused to repair the same.

6. The learned counsel for the petitioner submits that the fact of encroachment is also evident from the valuation of the property obtained by the respondent which is based on the area of land to be 265 sq. yds., whereas the Sale Deed in favour of the respondent itself showed that the area of land was only 214 sq. yds. He submits that the respondent, therefore, had encroached upon the public land and due to the action of the PWD removing such encroachment, it was the petitioners who suffered the loss.

7. The learned counsel for the petitioners further submits that the learned Arbitrator has erred in holding that the petitioners have been unable to prove the loss suffered by them. He submits that the loss was self-evident, inasmuch as the basement could not be now put to any use.

8. He further submits that in the arbitration proceedings, the respondent had refused to pay the fee of the Arbitrator. The petitioner was forced to pay even the share of the fee of the respondent, which the Arbitrator has failed to get reimbursed to the petitioners in the impugned Award.

9. On the other hand, the learned counsel for the respondent submits that by way of the Agreement to Sell, the respondent had sold the basement floor admeasuring 17x54 sq. ft. of the subject property to the petitioners. It is not the case of the petitioners that the area in occupation of the petitioners is lesser than the area sold. He submits that subsequent actions by the PWD or by the owner of the ground floor cannot make the respondent liable. In fact, the learned Arbitrator has also found that no grievance in this regard was raised by the petitioners for a long period.

10. I have considered the submissions made by the learned counsels for the parties.

11. In rejecting the claims of the petitioners, the learned Sole Arbitrator has observed as under:- “I am unable to appreciate the argument of the claimant. As already mentioned above, the agreement was entered into on 15th November 1996 while it was only in November 2004 that a grievance was made for the first time that a part of the property sold to the claimants belonged to the Government. In 2001, when the premises belonging to the claimants was assessed to housetax, it was clearly mentioned that the total area of the property was 214 sq. yards. Even at that stage, no grievance was made by the claimants about the respondents having allegedly misrepresented about the area of the property or having played fraud upon the claimants. No document has been placed on record to show that any part of the property is constructed on the Government land. The claimants were sold land measuring 17 ft. X 54 ft. which they are enjoying even now and have not been deprived of any part of the premises which was sold to them. In my opinion, the question as to whether or not any part of the property has been constructed on Government land is not relevant. The claimants have not been able to place anything on record which may persuade me to hold that any fraud or misrepresentation was played upon them by the respondent or any part of the Government land had been sold to the claimant. Issues no.1 and 2 are, accordingly, decided in favour of the respondent.”

12. Having held the above, the learned Arbitrator further found that the petitioners had been unable to prove that any part of the premises which has been sold to them, has been taken away by the respondent or the Government. The Arbitrator found that for almost 8 years, the petitioners had not raised any grievance on the reduction of the frontage of the shop.

13. On the issue of notice issued by the PWD, the learned Arbitrator found that the encroachment was in the form of construction of a staircase which led to the upper ground floor. It was found that no part of the basement was demolished nor was it threatened to be demolished.

14. On the issue of seepage, the learned Arbitrator found that no notice in this regard was given by the petitioners to the respondent. The Arbitrator, therefore, found no merit in the claims raised by the petitioners and dismissed the same.

15. The above findings of the Arbitrator are findings of facts reached by the Arbitrator based on the appreciation of the evidence produced before him. The petitioners have not been able to show any perversity in such findings, apart from contending that due to the construction of the road by CPWD, their ingress and egress from the basement floor has been completely hampered. However, for the same, the petitioners may have other remedies but, cannot lay blame on the respondent long after the conclusion of the sale transaction.