Facts: The Petitioner ("Developer") entered into a Development Agreement (2007) with the Respondent ("Trust") to redevelop property in Mumbai. A key obligation was for the Developer to construct a Hostel and Temple with an "Agreed Area" of at least 32,000 square feet. Years later, the Trust terminated the agreement via a Termination Notice (2016) on the grounds that the Developer only secured municipal approval (IOD) for 25,838 square feet ("Reduced Area"), failing to meet the fundamental condition of the contract. The Developer contended that the shortfall was due to the inability to prove the existence of a demolished fifth floor and that the parties had implicitly agreed to a variation in the plan.
Procedural Posture: The dispute was referred to a sole arbitrator. The Arbitral Tribunal held the Termination Notice was "illegal" under the contract's specific clauses but simultaneously refused the Developer’s prayer for specific performance and ordered the Developer to hand over possession of the property to the Trust, subject to a refund of the consideration paid. The Developer challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996.
Issue: Is an arbitral award inherently perverse or contradictory if it finds a termination notice "illegal" yet refuses to grant specific performance to the non-defaulting party? Additionally, is a dispute regarding possession under a development agreement non-arbitrable due to the exclusive jurisdiction of the Small Causes Court?
Holding: No to both. The High Court dismissed the petition, holding that the findings were reconcilable and the award did not suffer from patent illegality or perversity.
Reasoning: The Court reasoned that the Tribunal’s findings were not mutually repugnant but based on a "commonsensical" interpretation. While the Trust lacked a contractual right to terminate, the Developer was also not entitled to specific performance because it failed to demonstrate "readiness and willingness" to deliver the essential 32,000 square feet. The Tribunal essentially applied the principle of restitution to restore parties to their original positions. Regarding jurisdiction, the Court held that the Developer’s right to enter the property was an "accessory license" incidental to development rights, not a protected tenancy under the Presidency Small Cause Courts Act, making the dispute entirely arbitrable. Finally, the Court emphasized that under Section 34, it cannot re-appreciate evidence or interfere just because an alternative view exists.