Entities Under Article 12 Expected To Fully Disclose Relevant Facts Regarding Property/ Assets For Fair Commercial Transactions: Delhi High Court

Observing that fairness of procedure is in public interest, the Delhi High Court has said that full disclosure of relevant facts and developments apropos a property or asset or a commercial entity, is expected for a fair commercial transaction, especially from entities under Article 12 of the Constitution of India.

A division bench comprising of Justice Najmi Waziri and Justice Vikas Mahajan further added that it is expected that actions of such entities would always be imbued with the spirit of fairness.

The Court made the observations while dismissing an appeal filed by India Tourism Development Corporation Limited (ITDC) under sec. 37(1)(c) of the Arbitration and Conciliation Act, 1996 challenging the order passed by the Single Judge dismissing its petition under sec. 34 of the Act against an Arbitral Award.

The primary ground of challenging the order was patent illegality appearing on the face of the Award.

The counsel for the appellant submitted that the Award was against the public policy and that the respondent namely Bougainvillea Multiplex Entertainment Center Private Limited (BMEL) had been awarded compensation, which was unjustified and contrary to the admitted facts.

It was also submitted that the responsibility to maintain the structure, in which the licensed premises were housed, was upon the licensee and that the licensed premises were taken after inspection on 'as is where is basis'. It was added that the leakage in the roof of the structure was not to be repaired by the licensor and therefore damages, etc, that have been caused to and claimed by the licensee, was entirely because the licensor failed in duly maintaining the structure or keeping it in good repair.

In appeal, the Court said that the appellant was seeking re-appreciation of the evidence apropos the free and full access of the respondent to inspect the premises before the licensee signed the contract.

"It is a matter of record that the licensee did inspect the premises but it was not disclosed by Indian Tourism Development Corporation Ltd („ITDC‟) that the building was a temporary structure and that a notice dated 30.01.2013 had indeed been issued by the Ministry of Urban Development, Land and Development Office, calling-upon the appellant to regularize certain unauthorized constructions, i.e. the temporary structure," the Court noted.

It further noted that the appellant urged that the High court re-appreciate the evidence differently from the way it was understood and adjudicated upon by the Tribunal on the issue whether the licensee had an occasion to inspect the premises fully and freely or that they were fully informed of all issues concerning the premises or structure.

The Court said that the nature and quality of evidence produced before the Arbitrator was not for the court to re-appreciate in the appeal under sec. 37 of the Arbitration and Conciliation Act, 1996.

"Furthermore, no patent illegality is shown in the Award, warranting interference by this court. Fairness of procedure is in public interest, and full disclosure of relevant facts and developments apropos a property/asset/a commercial entity, is expected for a fair commercial transaction, especially from entities under Article 12 of the Constitution of India. It is expected that their actions would always be imbued with the spirit of fairness," the Court observed.

Accordingly, the appeal was dismissed.

Case Title: INDIA TOURISM DEVELOPMENT CORPORATION LIMITED (ITDC) v. BOUGAINVILLEA MULTIPLEX ENTERTAINMENT CENTRE PVT. LTD. (BMEL)

Citation: 2022 LiveLaw (Del) 549

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