Arbitral tribunal of three retired Supreme Court judges awards ₹155 crores in favour of Bengal Unitech

An arbitration tribunal awarded Bengal Unitech (claimant) a refund of ₹84 crores along with interest in proceedings against the Siliguri Jalpaiguri Development Authority, a statutory body [Bengal Unitech Universal Siliguri Projects Ltd. v. Siliguri Jalpaiguri Development Authority]..The tribunal comprising three retired Supreme Court Judges, Justices BP Singh, AK Patnaik and Gyan Sudha Misra awarded the claimant a refund of ₹84 crore which was deposited with the respondent for a development project that never took off..The development authority had acquired 500 acres of land to develop the same for residential use and after tender process, had accepted the claimant as the highest bidder in December 2006. Shortly after this, the claimant paid ₹84 crore, accepting the bid.In August 2007, the respondent handed over the possession of 90 acres to the claimant, but the claimant informed the tribunal that the same was only symbolic in nature since the possession was subject to the Calcutta High Court’s verdict in a pending plea filed against the award of the project to the claimant by another bidder..The grievance of the claimant arose when even after a long gap, the respondent failed to finalise the development agreement which was to be executed between the parties. Further, they failed to execute the lease deed for the land in favour of the claimant despite deposit of ₹84 crore.In March 2009, without acknowledging that further payment by the claimant was subject to possession being handed over, the respondent sought disbursement of the second and third instalments by Unitech..The claimant was aggrieved by this as the execution of the lease deed between the two parties remained pending and there was no clear title to the land.It was the contention of the claimant that due to the respondent’s failure to execute the lease deed, Unitech was unable to fulfil its obligations to its banker..Following this, the respondent terminated the agreement and offered to refund the balance out of the ₹84 crore after deduction of amounts as it was entitled to deduct in terms of the agreement, such as interest etc.Since the parties were unable to come to an understanding and the dispute persisted, a request for conciliation was made. However, the same was terminated by the conciliator with the reasoning that despite efforts, further efforts seemed to be no longer justified..With this, the claimant invoked arbitration clause and an arbitration tribunal was constituted.The main thrust of the respondent’s contention was that the possession of land was physically handed over to the claimant and the theory of symbolic possession was denied.It was contended that the second and third instalments were deposited for no good reason and since the default persisted for a long period, the respondent was compelled to terminate the agreement.The respondent completely denied the allegations of the claimant and repudiated its claims, and further made counter claims for penal interest..The tribunal examined the issue of possession as well as execution at length and concluded that there was no doubt regarding actual physical possession being handed over to the claimant.“It must, therefore, be held that the Respondent Authority handed over actual physical possession of 90.19 acres of land to the Claimant, and the denial of the Claimant in this respect has no force, and must be rejected,” the tribunal stated..With regard to the question of who was responsible for the delay of the project ultimately leading to its termination, the tribunal found that both parties had delayed in performing their respective obligations. Although, it was observed that while discussions were taking place, no steps were taken by the respondent to execute the lease deed even though the claimant was insisting on the same.“The Responsibility for execution of the lease deed rested on both the parties but it appears that rather than getting down to finalizing the terms and conditions of the lease deed to be executed, only meetings were held to discuss the matter with no result, though fortunately the Development Agreement was finalised, though very late,” the tribunal said.It was stated that there was no justification for the respondent to insist on payment of second and third instalments without execution of the lease deed.“Only upon execution of the lease deed, the claimant could have claimed a good, valid, clear and marketable title to the project lands free of any encumbrance or claims as provided under Clause 3.6 of the Development Agreement,” the tribunal held..Therefore, it ruled that on examination of the evidence, the claimant could not be blamed solely for not executing the agreement’s terms, especially since two crucial documents were not obtained by the Respondent to enable the claimant’s construction work.“Without a title deed, the Claimant could not be expected to commence development and construction activities on the lands handed over to it.”.In consideration of this, the claimant's plea for refund of ₹84.24 crores which it had deposited with the Respondent Authority was accepted along with interest of 6 per cent per annum. The respondent was directed to pay the claimant ₹25 Lakhs for reimbursement of litigation and arbitral costs.All counter claims of the respondent were rejected..The claimant was represented by advocates Siddharth Batra, Moumita Chakraborty, Chitra Narang and Harsh Nivas.Senior Advocate Kalyan Bandopadhyay and advocate Sirsanya Bandopadhyay appeared for the respondent.