,,
Navin Chawla, J",,
I.A. No.17427/2018 (Exemption),,
Allowed, subject to all just exceptions.",,
OMP (COMM) 514/2018,,
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Actâ€) has been",,
filed by the petitioner challenging the Arbitral Award dated 11.08.2018 passed by the Sole Arbitrator adjudicating the disputes that have arisen,,
between the parties in relation to the Concession Agreement dated 23.07.2007 executed between the parties.,,
2. By way of the above referred Concession Agreement the respondent, the Municipal Corporation of Delhi awarded the project for development,",,
design, financing, construction, operation/maintenance and transfer of (a) state-of-the art parking facilities for systematic and organized parking of",,
vehicles at Kamla Nagar, New Delhi, (b) demanding/ levying, collecting, appropriating and retaining parking fees, tariffs, commercial development",,
lease, license fees and user charges as applicable from the users of the facilities, to the petitioner.",,
3. The petitioner constructed eight floors of basement parking with three floors on the top, that is, ground, first and second floor as commercial space.",,
The petitioner filed Tax Return for the year 2014-2017 and paid Property Tax only in respect of the ground, first and second floor. The respondent in",,
turn issued a notice dated 18.07.2016 demanding Property Tax even with respect to the floors that were being used as parking area. Dispute arose,,
between the parties as to whether the petitioner is liable to pay the Property Tax with respect to the area being used as parking facility.,,
4. The petitioner claims that in terms of the Concession Agreement it has to pay the Property Tax only with respect to the area being used for,,
commercial purpose, that is, the ground, first and second floor and not for the area being used as the parking facility.",,
5. The petitioner places reliance on the definition of “commercial premises†and “commercial area†as defined under Article 1 (Definitions,,
and Interpretations), Section 1.1 (Definitions) of the Concession Agreement. The same are reproduced here in below:",,
“Section 1.1 Definitions,,
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“Commercial Premises†means the shops, buildings, establishments, offices, and retail outlets that shall be developed, financed, designed and",,
constructed at the Commercial Area.,,
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“Commercial Area†means the land and all rights in relation thereto at which the Commercial Premises shall be developed, constructed and",,
established.â€,,
6. The petitioner further places reliance on Article 2.1 (b)(iv) of the Concession Agreement (Grant of authorization/ concession), which is reproduced",,
hereinbelow:,,
“Section 2.1 Grant of authorization/ concession,,
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(b) In consideration for implementing the Project, MCD hereby grants to the Authorisee/ Concessionaire as certified by the “Observer†the right",,
and authority/ to undertake the commercial development of the Commercial Area and to levy, demand, collect, retain and appropriate the Commercial",,
Premises Prices.Â,,
For this purpose as certified by the observer, MCD shall grant to the Authorisee/ Concessionaire the exclusive right and authority to:",,
xxx,,
(iv) Receive Commercial Premises Prices from Lessees as consideration for the lease period on yearly basis at rates determined by the Authorisee/,,
Concessionaire; provided that the Lessees shall be required to pay to MCD/Competent Authorities land and buildings taxes, property tax and other",,
applicable under Law at the rates prevent from time to time.â€,,
7. Reliance is also placed on Section 4.4 (a) of the Concession Agreement, which is reproduced hereinbelow:",,
“Section 4.4 50 years (fifty Years) Lease of Commercial Area (a) In consideration for implementing the Project, MCD shall grant commercial,",,
developmental rights to the Authorisee/ Concessionaire over the Commercial Area. In this behalf, MCD shall, deliver to the Authorisee/",,
Concessionaire as per terms of the tender document, Vacant Possession of the Project Site, free and clear of all Encumbrances. The Authorisee/",,
Concessionaire shall remove at its cost the structures or utilities that may exist on or at the Commercial Area MCD shall provide the necessary,,
assistance in this behalf. Thereafter, the Authorisee/ Concessionaire shall have exclusive right and authority to undertake the commercial development",,
or the Commercial Area by constructing the Commercial Premises there at by itself or through sub-contracting arrangements and to levy, demand,",,
collect, retain and appropriate the Commercial Premises Prices in accordance with the terms hereof.â€",,
8. Learned senior counsel for the petitioner further places reliance on the answer to the query raised by the petitioner on the Request for Proposal.,,
The Request for Proposal inter-alia contains the following condition:,,
“However the Bidders may please note that MCD will charge the prevalent property taxes on all commercial developments proposed.â€,,
9. The petitioner raised the query on the RfP and elicited the following reply:,,
xxx,xxx,xxx
20.,"Regarding the Property Tax: (Tender
Document pg.25 last para) We
humbly invite your kind a(cid:35)en(cid:36)on in
this ma(cid:35)er as under: (a) The property
being constructed and developed
belongs to MCD. The bidder is not an
absolute owner of the property; on
the contrary the bidder is inves(cid:36)ng
the capital for the project and the
cost of the project is to be recovered
through painful slow process during
the subsistence of the Concession
Period. Hence, it is requested that the
owner pay the MCD itself the
Property tax or any of such taxes,
which in normal course is the
liability of the owner of the property.","The Property tax will be charged on
the prevalent property taxes that are
on the Commercial Development
proposed by the Bidders.
13. The Arbitrator having interpreted the terms of the Agreement, which in no way can be said to be unreasonable or perverse, the Award cannot be",,
interfered with in exercise of powers under Section 34 of the Act.,,
14. In Associate Builders vs. DDA, (2015) 3 SCC 49, the Supreme Court has cautioned the Court exercising power under Section 34 of the Act in the",,
following words:,,
“42. In the 1996 Act, this principle is substituted by the “patent illegality†principle which, in turn, contains three subheads:",,
xxxxxx,,
42.3. (c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under:",,
“28. Rules applicable to substance of dispute. (1)-(2) (3) In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract",,
and shall take into account the usages of the trade applicable to the transaction.â€,,
This last contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an",,
arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the",,
terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be,,
something that no fair-minded or reasonable person could do.,,
43. In McDermott International Inc. v. Burn Standard Co. Ltd.[ McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181 ], this",,
Court held as under: (SCC pp. 225-26, paras 112-13)",,
“112. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of,,
construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature,",,
scope and ambit of the arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration,,
the conduct of the parties. It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of,,
construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of",,
law. [See Pure Helium India (P) Ltd. v. Oil and Natural Gas Commission [(2003) 8 SCC 593 : 2003 Supp (4) SCR 56 1a]nd D.D. Sharma v. Union of,,
India [(2004) 5 SCC 325] .],,
113. Once, thus, it is held that the arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise its jurisdiction unless",,
it is found that there exists any bar on the face of the award.â€,,
15. In National Highway Authority of India v. ITD Cementation India Ltd. (2015) 14 SCC 2, 1the Supreme Court reiterated the above principle in the",,
following words:-,,
“25. It is thus well settled that construction of the terms of a contract is primarily for an arbitrator to decide. He is entitled to take the view which,,
he holds to be the correct one after considering the material before him and after interpreting the provisions of the contract. The Court while,,
considering challenge to an arbitral award does not sit in appeal over the findings and decisions unless the arbitrator construes the contract in such a,,
way that no fair-minded or reasonable person could do.â€,,
16. In view of the above, I find no merit in the present petition and the same is dismissed with no order as to costs.",,
