Specific Performance Refusal Upheld as Plausible Exercise of Arbitral Discretion Absent Patent Illegality or Perversity

The dispute arose from an Agreement to Sell (ATS) dated 28.09.2016 for an industrial plot in Noida for a consideration of Rs. 8 crores

The Petitioners (purchasers) paid Rs. 3.50 crores, but the Respondents issued a Termination Notice on 12.09.2017 alleging non-payment of the balance

The Petitioners claimed the property was initially encumbered despite a "non-encumbrance" declaration in the ATS

Following arbitration, the Sole Arbitrator passed an Award on 27.01.2025, denying specific performance of the ATS but ordering a refund of the paid amount with 15% interest

The Petitioners challenged this Award under Section 34 of the Arbitration and Conciliation Act, 1996 ("A&C Act"), alleging patent illegality and failure to apply the statutory presumption under the Specific Relief Act

1. Whether the Arbitral Tribunal’s denial of specific performance was patently illegal for allegedly disregarding the statutory presumption under Section 10 of the Specific Relief Act

2. Whether the scope of judicial interference under Section 34 of the A&C Act permitted a re-appreciation of evidence regarding the Petitioners' readiness and willingness

The court applied Section 34 of the A&C Act, as amended in 2015, which limits the setting aside of awards to grounds of "public policy of India" and "patent illegality," expressly prohibiting re-appreciation of evidence

The court relied on OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions and Ssangyong Engg. & Construction Co. Ltd. v. NHAI to define "patent illegality" as an error going to the root of the matter, not a mere erroneous application of law.

Regarding specific performance, the court considered Section 10 of the Specific Relief Act (pre-2018 amendment), which rendered specific performance discretionary if monetary compensation was an adequate relief

Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. regarding the requirement for "intelligible and adequate" reasoning in awards

The Court observed that the Arbitrator specifically framed and addressed the issue of specific performance by considering the commercial nature of the industrial plot transaction

The Arbitrator found that because the dispute revolved around a commercial transfer for a quantifiable sum, the breach could be adequately compensated by a refund with interest

The Court rejected the Petitioners' argument that the Arbitrator ignored the statutory presumption under Section 10, noting that the Tribunal consciously balanced the conduct of both parties—including the Respondents' initial false declaration of non-encumbrance and the Petitioners' subsequent failure to tender the balance consideration

The Court emphasized that it does not sit as an appellate court; as long as the Arbitrator’s view is "plausible" and "reasoned," the Court cannot substitute its own discretion for that of the Tribunal

The Court affirmed the Arbitrator's decision to deny specific performance while granting the alternative relief of a refund of Rs. 3.50 crores plus 15% simple interest and reimbursement of transfer charges

The holding confirms that a reasoned arbitral choice between specific performance and monetary damages in a commercial contract is a "possible view" that is immune to interference under Section 34 of the A&C Act