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Why the Delhi HC directed DLF to pay damages to Senior Advocate Chander Lall

Why the Delhi HC directed DLF to pay damages to Senior Advocate Chander Lall

Aditi Singh

The Delhi High Court has directed DLF Home Developers Ltd. to pay damages to Senior Advocate Chander Lall for delayed delivery of his office space.

The order was passed by a Single Judge Bench of Justice Navin Chawla in a plea under Section 34 of the Arbitration and Conciliation Act, 1996 by Lall, challenging an arbitration award in relation to a 2006 Retail/Commercial Office Space Buyer’s Agreement between the two.

The dispute before the sole arbitrator pertained to the delay in handing over of possession of the office space to Lall by DLF.

It was DLF’s case that the possession of the office space could not be handed over to Lall, as he had defaulted in making the last instalment of the payment and other charges like maintenance and holding charges.

Lall, on the other hand, claimed that the last instalment was payable only on the receipt of notice from DLF stating that it had received the Occupancy Certificate. Since no such intimation was received, the final instalment became due only on January 12, 2011, when Lall received such intimation.

However, in spite of Lall being ready and willing to make such payment, DLF refused to hand over the possession of the office space until and unless the other charges demanded by it are also paid.

Disputes also arose between the parties with respect to the demand for maintenance, holding charges etc. The matter was thus referred to arbitration.

The arbitral award stated that the final instalment became payable only after DLF sent an intimation of receipt of Occupancy Certificate. Since DLF could not show proof of such intimation, the arbitrator held that Lall was not liable to pay the final instalment till January 12, 2011, when for the first time DLF sent an e-mail giving details of payment allegedly due and the paperwork and other formalities to be completed.

The award also stated that Lall was entitled to damages for delay in grant of possession by January 12, 2011, at the rate of Rs. 25/- per sq. ft. per month. However, for the period beyond that, it was stated that Lall was not entitled to any damages as “both the parties contributed to the delay in handing over of the possession of the office space”. DLF was also not awarded any interest on the last instalment for this period.

In appeal before the High Court, Lall challenged the finding that he was not entitled to claim damages beyond January 12, 2011. He further challenged the quantum of damages confined to Rs. 25/- per sq. ft. per month.

Before the Delhi High Court, Lall argued that he did not contribute to the delay. Since DLF demanded maintenance and holding charges along with interest, Lall had merely protested against the same. At the same time, he had offered to make payment of the last instalment on May 18, 2011, while requesting DLF to hand over the vacant possession of the property.

On the other hand, DLF stated that Lall was “insisting on payment of damages instead of showing eagerness and making any serious offer to pay the balance amount and complete the formalities.”

After hearing the parties, the Court also perused the series of emails exchanged between Lall and DLF over the course of approximately five months, starting January 12, 2011.

Disagreeing with DLF, the Court stated that merely because Lall demanded damages in the last email dated May 18, 2011, it cannot be disputed that it was an offer to pay the last instalment to seek possession of the office space.

The Court recorded that Lall had very clearly stated that he was willing to deposit the last instalment and in return expected the vacant possession of the property.

The demand for damages was not made a pre-condition to the handing over of the possession. A reading of the above e-mail would clearly show that the petitioner was merely protesting against the demand of holding charges, maintenance charges and interest on the alleged delay in payment. These demands have been held to be unjustified by the Arbitrator and therefore, the petitioner cannot be faulted for raising such protests.”

Further quoting an order passed by the arbitrator in February 2013, the Court observed that Lall had offered to pay the last instalment to DLF even before the arbitrator, while also securing DLF’s interest with respect to the balance amount towards holding charges, maintenance charges and delayed interest charges. The offer was, however, refused by DLF.

Meanwhile, the possession was eventually handed over to Lall in 2014 and the sale deeds were executed in December 2014.

The Court also held that the arbitrator’s finding that Lall contributed to the delay could not be sustained.

The petitioner certainly cannot be penalized for protesting against an unjustified demand. The finding of the Arbitrator that the petitioner is also guilty in contributing to the delay in handing over of the possession of the office space beyond the period of 12.01.2011, therefore, being contrary to the evidence on record, cannot be sustained.”

The Court, however, refused to modify the quantum of damages awarded to Lall.

The above being a matter of interpretation of the Agreement, which I do not find to be unreasonable or perverse, does not warrant any interference by this Court in exercise of its limited jurisdiction under Section 34 of the Act.

It also set aside the finding directing Lall to pay interest on the ground rent with effect from February 12, 2011.

The Court thus awarded damages to Lall at the rate of Rs. 25/- per sq. ft. per month till the actual possession was handed over to him.

Senior Advocate Lall appeared in person and was assisted by Advocates Nancy Roy, Shreya Sethi, Sandeep Sharma and Lakshay Virmani.

DLF was represented by Senior Advocate BB Gupta with Advocates Amit Agarwal and Saurabh Nirupam. 

Read the Judgment: