Delhi HC Rejects Senior Advocate Chander Lall's Plea For Higher Damages Against DLF Over Possession Delay

A Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar upheld a single judge's order affirming compensation at the rate of Rs. 25 per square foot per month, rejecting Lall's claim for damages at Rs. 200 per square foot per month.

Lall appeared in person along with Advocates Nancy Roy, Ananya Chug and Ananya Mehan. DLF was represented by Senior Advocate B.B. Gupta, along with Advocates Vishnu Kanth and Karan Jain.

The dispute arose out of Retail/Commercial Office Space Buyer's Agreements executed on May 31, 2006. Lall contended that under the terms of the agreement, the final instalment became payable only after DLF informed him that it had obtained an occupancy certificate from the Delhi Development Authority (DDA). According to him, although DLF received the occupancy certificate on June 10, 2009, it communicated the fact only in 2011.

DLF, however, argued that possession could not be delivered because Lall had defaulted in paying the final instalment and other dues.

The dispute was referred to arbitration. The arbitrator found that DLF was obliged to intimate Lall about the receipt of the occupancy certificate and that the company had failed to establish that such communication had been made. Consequently, damages were awarded at ₹25 per square foot per month from June 10, 2009 to January 12, 2011.

The arbitrator, however, declined to grant damages beyond January 12, 2011, holding that both parties had contributed to the subsequent delay.

When the matter reached the High Court, a single judge modified the arbitral award and directed DLF to continue paying compensation at ₹25 per square foot per month until possession was actually handed over in November 2014. The single judge also set aside the arbitrator's direction requiring Lall to pay interest on ground rent from February 12, 2011.

Before the Division Bench, Lall argued that Clause 11.4 of the agreement, which capped compensation at ₹25 per square foot per month, was inapplicable because the delay was attributable to DLF's negligence. He submitted that the clause was intended to apply only where the builder abandoned the project or became incapable of delivering possession within the stipulated period.

The Bench, however, declined to accept the argument and held that the arbitral tribunal's reading of the agreement did not warrant interference in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996.

"We do not find the interpretation given by the learned Arbitrator to be unreasonable or perverse for us to interfere in this appeal under Section 37 of the Act," the Court observed.

The Court also found no merit in Lall's claim for enhanced damages of ₹200 per square foot per month. It noted that the lease deeds and MagicBricks printouts relied upon to establish prevailing market rentals had not been proved in accordance with law.

"The finding of the learned Single Judge is that the appellant has failed to prove claim for higher damages and as such the claim was denied by the learned Arbitrator by holding that the appellant was unable to prove the documents in questions ... The conclusions drawn by the learned Arbitrator is a finding of fact which was confirmed by the learned Single Judge. It cannot be varied more particularly in appeal under Section 37 of the Act," the Bench held.

Accordingly, the appeal was dismissed.