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Jagjeet Singh Lyallpuri (Dead) Through L.Rs. & Ors. v. M/s Unitop Apartments & Builders Ltd.

Civil Appeal · 2019 INSC 1309Decided 3 Dec 2019
Civil Appeal No. 692 of 2016
Justice R. Banumathi · Justice A.S. Bopanna · Justice Hrishikesh Roy

Background

The appellants, landowners in Ludhiana, had entered a 1996 joint-venture agreement with a builder to construct a residential-cum-commercial complex, which the builder abandoned after completing only part of the work. After the landowners terminated the agreement, the dispute went to a sole arbitrator (a former Supreme Court judge), who dismissed both the builder's claims and the landowners' counter-claims. A single judge of the Punjab and Haryana High Court later set aside the award and sent the matter back to the arbitrator, holding that the parties had not been properly allowed to lead evidence and cross-examine witnesses.

Decision Breakdown

The Supreme Court found that the parties had expressly and knowingly consented before the arbitrator to dispense with cross-examination and rely only on affidavits and documents, a procedural choice permitted under Section 19 of the Arbitration and Conciliation Act, and that the builder could not turn around afterward and complain about the very procedure it had agreed to. The Court held that a Section 37 appeal could not go beyond the narrow grounds available under Section 34, and that the arbitrator had in fact addressed all the claims, including the builder's claim for construction costs. It set aside the High Court's remand order, restored the arbitrator's award, and, exercising its special powers under Article 142 of the Constitution to do complete justice, additionally directed the landowners to pay the builder Rs. 45 lakhs in full settlement, after which the landowners could resume possession of the land.

Lesson Learnt

If parties expressly and knowingly agree to a particular procedure before an arbitrator (such as dispensing with cross-examination), they generally cannot later challenge the award on the ground that the very procedure they agreed to was unfair; appellate review of arbitration awards is narrow and does not permit a fresh look at the merits.

Official source (sci.gov.in)View Judgment (PDF)

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