The Delhi High Court has dismissed an appeal filed by Senior Advocate Chander Mohan Lall seeking enhanced compensation from DLF Home Developers Ltd. for the delayed delivery of commercial office spaces, holding that the arbitral tribunal’s interpretation of the contractual compensation clause was neither unreasonable nor perverse and therefore did not warrant interference under Section 37 of the Arbitration and Conciliation Act, 1996.
A Division Bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar affirmed the judgment of the Single Judge, which had upheld compensation at the contractual rate of ₹25 per square foot per month while extending the compensation period until actual delivery of possession.
The dispute arose out of Retail/Commercial Office Space Buyer’s Agreements executed in 2006. The appellant contended that DLF had failed to notify him of the receipt of the Occupancy Certificate and unlawfully delayed handing over possession, causing substantial rental losses. He argued that the prevailing market rent ranged between ₹150 and ₹200 per square foot per month and sought compensation accordingly, contending that the contractual clause limiting compensation to ₹25 per square foot per month was inapplicable to a case of negligence by the developer.
Rejecting the contention, the Court held that the arbitrator’s interpretation of Clause 11.4 of the agreement constituted a plausible contractual construction. The Bench observed that courts exercising jurisdiction under Sections 34 and 37 of the Arbitration Act cannot substitute their own interpretation merely because another view is possible, unless the arbitral interpretation is patently unreasonable or perverse.
The Court further noted that both the arbitrator and the Single Judge had concurrently found that the appellant failed to prove his claim for higher damages. The lease deeds and online rental listings relied upon to establish prevailing market rents were held not to have been proved in accordance with law, and such factual findings could not be reopened in an appeal under Section 37.
Distinguishing the Supreme Court’s decision in Wing Commander Arifur Rahman Khan v. DLF Southern Homes Pvt. Ltd., (2020) 16 SCC 512, the Bench observed that unlike the consumer dispute involved in that case, the present matter arose from arbitral proceedings where compensation had already been awarded at the contractual rate together with interest of 15% and 18%, making the precedent inapplicable on facts.
Finding no infirmity in the Single Judge’s order or the arbitral award, the Division Bench held that no interference was warranted and dismissed the appeal, thereby reaffirming that contractual compensation clauses interpreted reasonably by an arbitral tribunal are ordinarily immune from judicial review under the limited scope of Section 37 proceedings.
