Arbitrator's Award Excusing Ground Rent for Unincluded Layout Plots Does Not Constitute Patent Illegality

The Respondent was the successful bidder for a residential plot (E-265, Amar Colony) in a DDA auction held on 23.09.1996

Although the Respondent paid the full amount, possession was delayed due to third-party litigation and physical encroachment by a stone wall, which was only removed on 14.10.1999

Furthermore, the Respondent discovered the plot was not included in the area's layout plan, preventing the sanctioning of construction plans

Following a consumer dispute that reached the Supreme Court, the matter was referred to arbitration

On 21.12.2010, the Arbitral Tribunal awarded the Respondent interest on the bid amount, exempted him from ground rent until the plot was included in the layout plan, and directed the DDA to take steps for such inclusion

The DDA challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996

Whether the Arbitral Award suffered from patent illegality or perversity by exempting the Respondent from ground rent and awarding interest due to the non-inclusion of the plot in the layout plan

Whether additional documents filed by the Petitioner during Section 34 proceedings, claiming the plot was included in the layout plan since 1984, could be considered

The Court applied Section 34 of the Arbitration and Conciliation Act, 1996, which limits judicial interference to specific grounds such as "patent illegality" or conflict with the "public policy of India"

It relied on the precedent set in *Ssangyong Engg. & Construction Co. Ltd. v. NHAI*, which clarifies that "patent illegality" refers to errors going to the root of the matter, excluding mere erroneous application of law or re-appreciation of evidence

The court also noted that an award is "perverse" if it is based on no evidence or ignores vital evidence

Under the Delhi Development Act, 1957, the statutory obligation to prepare and maintain layout plans rests with the DDA

The Court observed that the DDA's stance during the arbitration was that the Respondent should have exercised "due diligence" regarding the layout plan, effectively admitting the plot's non-inclusion at that stage

The Arbitral Tribunal's finding—that a purchaser assumes an auctioned plot is free of encumbrances and ready for construction—was deemed a reasonable conclusion based on the evidence

On the issue of additional evidence, the Court noted that while a "strong exception" exists in law for adducing new evidence under Section 34, it was inapplicable here because the DDA's new documents directly contradicted its previous factual stands before the NCDRC and the Arbitrator

The Court held that since the DDA had auctioned a plot that was not legally buildable, the Tribunal’s decision to waive ground rent and award interest was neither perverse nor against the fundamental policy of Indian law

It held that the Arbitrator’s findings were based on a valid appreciation of the facts and that the DDA had acted negligently by auctioning a plot excluded from the layout plan

The DDA was directed to comply with the directions regarding the layout plan inclusion, and the enforcement matter was listed for a future date