Mutual Breaches and Inordinate Delay Bar Specific Performance of Joint Development Agreement Under Section 34 Limitation

The Appellant (FCIPL) and the Respondents (Landowners) entered into a Memorandum of Understanding (MOU) in 2013 and a registered Joint Development Agreement (JDA) in 2014 for an apartment complex

Execution was delayed primarily due to an order by the National Green Tribunal (NGT) regarding buffer zones around water bodies, which was subsequently challenged in the Supreme Court

The Landowners terminated the JDA in 2018 alleging breach of time-lines, whereas FCIPL claimed the Landowners obstructed the project by withdrawing cooperation after the Supreme Court's 2019 ruling

A Sole Arbitrator passed an award dated 12.06.2023 cancelling the JDA and GPA, while directing the Landowners to refund ₹65,00,000/- to FCIPL

Both parties challenged the award under Section 34 of the Arbitration and Conciliation Act, which the Commercial Court dismissed on 30.01.2024

1. Whether the Arbitral Tribunal exceeded its jurisdiction by deciding "ex aequo et bono" (interests of justice and equity) without express authorization, in violation of Section 28(2) of the Act

2. Whether the award was patently illegal due to contradictory findings regarding mutual breach and the resulting cancellation of the JDA

3. Whether the court could interfere with the Arbitrator’s factual determination of the refund amount

Section 28(2) of the Arbitration and Conciliation Act, 1996, which prohibits an arbitrator from deciding ex aequo et bono unless expressly authorized

Section 34 regarding the limited grounds for setting aside an award, specifically focusing on "patent illegality" and "public policy"

Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., which mandates that an award must have intelligible and adequate reasoning, but the court should not set aside awards for mere "gaps in reasoning" if the conclusion is plausible

The Court examined the Arbitrator’s reasoning that both parties were responsible for the project's failure

While the Arbitrator used the phrase "interest of justice and equity," the Court analyzed this not as a departure from the law, but as a practical consequence of the finding of mutual breach

The Court noted that FCIPL's failure to take "effective steps" to resubmit plans after the NGT stay was lifted constituted a breach, rendering the denial of specific performance a legal and plausible outcome

Regarding the refund of ₹65,00,000/-, the Court held that the Arbitrator meticulously analyzed the evidence and receipts produced by FCIPL, and a Section 34 court cannot re-evaluate such factual findings or supplant its own opinion

It held that the Arbitrator’s decision to cancel the JDA and restore parties to their pre-contract position via a monetary refund was a "plausible view" not vitiated by patent illegality

The cancellation of the GPA was upheld as a natural consequence of the JDA's termination

The Landowners' challenge to the monetary award was also rejected as it was based on factual evidence accepted by the Tribunal