Kolkata, Oct. 15 -- The Calcutta High Court has set aside an arbitral award against the Digha Shankarpur Development Authority (DSDA), holding that the arbitrator granted compensation without sufficient evidence and failed to examine the actual terms of the agreement.
A division bench of Justices Debangsu Basak and Aryak Dutt held that the award was "patently illegal and perverse".
The dispute arose from a November 2004 agreement under which Friends Engineering Co-operative Society Ltd was to construct a market complex with around 690 stalls at New Digha at an estimated cost of Rs 5.27 crore.
DSDA stopped the work in March 2005, citing discrepancies in the builder's selection and the absence of environmental clearances, and subsequently cancelled the agreement. The society approached an arbitrator, alleging wrongful termination and seeking compensation.
In 2014, the arbitrator awarded various sums, including Rs 51.85 lakh towards loss of expected profit.
A Purba Medinipur district court set aside the award in 2019, prompting the society to appeal. The High Court found that the arbitrator had treated the agreement as a conventional works contract without examining provisions requiring the builder to recover construction costs from prospective stall buyers or lessees. The stipulated rates were left blank. The bench also found no evidence of stall demand, rates or the profit margin the society could have earned. It questioned awards for certain advances and expenses unsupported by records.
Although the High Court held that the district court had wrongly reassessed expert evidence, it found independent grounds to invalidate the award.
The entire award was set aside, but the Rs 15-lakh interim payment already made by DSDA
remained unaffected.
Published by HT Digital Content Services with permission from Millennium Post.