"As Is Where Is" Clause Bars Claims for Encroachment and Capacity Deficits in Parking Site Allotments

The Appellant (DDA) allotted a truck parking site to the Respondent (Claimant) via an allotment letter dated 26.03.2010.

The Respondent accepted the terms, paid the license fees, and took possession on 05.04.2010.

However, the Respondent simultaneously raised grievances regarding 40% encroachment by local vendors and lack of a boundary wall.

Claiming operational losses, the Respondent sought arbitration.

The Sole Arbitrator awarded the Respondent ₹81,71,840/-, including a 40% refund of license fees and compensation for operational losses, holding that DDA failed to provide an "intact" site.

DDA’s objections under Section 34 of the Arbitration and Conciliation Act, 1996, were dismissed by the District Judge on 31.10.2025.

DDA appealed the judgment under Section 37 of the Act.

Whether the Arbitrator’s interpretation of the "as is where is" clause (Clause 17) to allow compensation for encroachments was patently illegal or perverse.

Whether the Respondent was entitled to a refund of security deposits and litigation expenses despite the "as is where is" stipulation.

The Court applied Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996, regarding the limited scope of judicial interference in arbitral awards.

It relied on the Supreme Court precedent in *K.C. Ninan v. Kerala State Electricity Board*, which establishes that "as is where is" clauses place the burden of due diligence regarding physical conditions and encumbrances on the bidder.

The doctrine of *caveat emptor* applies to such tenders.

Furthermore, the court noted that in public tenders, post-allotment oral assurances cannot override written contractual terms as it prejudices other potential bidders.

The Court found that Clause 17 of the Agreement explicitly stated the site was tendered on an "As is where is Basis" and prohibited claims regarding the condition or capacity of the site.

The Respondent admitted in cross-examination that he inspected the site and was aware of the terms before bidding.

The Court reasoned that the Arbitrator’s finding—that DDA was liable for encroachments because it "promised" via letters to build a wall—amounted to a perverse interpretation that ignored the contract's core indemnity.

The Court emphasized that allowing a bidder to seek a fee reduction after accepting a site with known encroachments undermines the integrity of the public auction process, as other bidders might have stayed away due to those very encumbrances.

However, the Court found no bar to the refund of the security deposit once the contract concluded.

It set aside the award for refund of excess license fees (Claim A) and compensation for operational losses (Claim B), holding the Arbitrator's interpretation of Clause 17 was patently illegal.

The Court upheld the refund of the security deposit of ₹10,22,000/- (Claim F) and litigation expenses of ₹60,000/- (Claim E), along with 9% per annum interest from the date of filing the arbitration petition (03.11.2011) until realization.