Arbitration – Patent illegality in passing Award without deciding questions of fraud
In pursuance of the advertisement, the claimants had given eight shops / showrooms in the building Rang Heights at Gandhinagar to the respondent for a period of five years from 1.9.2012 to 31.8.2017 vide lease agreement dated 14.9.2012
There was clause for penalty at 1.5 times of the lease rent in case of failure to hand over possession after expiry of lease period.
The respondents did not pay the monthly rent from January 2014 but continued to use property during remainder lease period and also after expiry of lease period on 31.8.2017.
The Arbitrator was appointed by the order dated 27.4.2018.
The respondent Company contended that the lease agreement dated 14.9.2012 itself was an outcome of fraud & collusion by its former Executive Chairperson, unenforceable under Section 23 of the Contract Act and no claim can be set-forth.
The Arbitrator, however, referred the dispute of fixation of reasonable rent under the Government Resolutions to the Competent Authority without answering the questions raised by the Respondent.
All these questions would give rise to the question of arbitrability or non-arbitrability of the dispute on the plea of fraud which permeate the entire contract and render it as avoid.
The respondents gave possession of the property on 31.12.2020 at the fag end of the arbitration proceedings.
Award suffers from patent illegality and is against the substantive law of contract and therefore, liable to be set-aside.
Judgment dated 14.10.2024 of the Division Bench of the Gujarat High Court in R/First Appeal No.3516 of 2024 of Shailesh Anilkumar Amin and another Vs. Gujarat Metro Rail Corporation (GMRC) Ltd.
