Authority: High Court of Judicature at Madras

Order Date: 16-07-2026

Case Overview

  • Parties: Appellant – Mrs. B. Anubhama (resident of 292/a, Arcot Road, Kodambakkam, Chennai). Respondents – 1) S. Baskaran, Flat No.F1, A Block, Indira Grandeur Apartment, EB Office Road, Mugappair East, Chennai; 2) M.V. Salai Abaranam, D‑139, Parameswari Vihar, No.28, Arcot Road, Chennai; 3) R. Kalanjiam (deceased); 4) K. Venkatraman, No.3, Sanjay Gandhi Nagar, Virugambakkam, Chennai.
  • Business Background: M.V. Salai Abaranam operates in the real‑estate sector, providing buyer‑identification services on a service‑charge basis. Mrs. B. Anubhama conducts real‑estate activities through M/s. Sameera Associates. Mr. S. Baskaran is the husband and Power Agent of Mrs. Anubhama.
  • Memorandum of Understanding (MOU): Dated 19‑05‑2006, the MOU stipulated a service charge of Rs 1,500 per cent payable at the time of registration of each sale deed. The MOU also incorporated an arbitration clause for dispute resolution.
  • Transaction: ETA Star Properties Developers purchased 500 acres of land in villages of Sripeumbudur Taluk (Thirumangalam, Vasanapattur, Thirupandiyur, Mampakkam, Kaliyamanikkam, etc.) through respondents 1 and 2. The parties agreed that respondents 1 and 2 would jointly pay Rs 7,50,00,000 as service charges, of which the claimant (M.V. Salai Abaranam) was entitled to Rs 2,50,00,000.
  • Payments Made: Respondents 1 and 2 paid only Rs 27,00,000, leaving a balance of Rs 2,23,00,000. The claimant sought interest at 24% on the unpaid amount, claiming Rs 1,60,56,000 plus future interest and costs.
  • Arbitration Proceedings: The claimant filed a claim before an arbitral tribunal. Respondents 1 and 2, represented by counsel, repeatedly sought adjournments and remained largely absent; respondents 3 and 4 were also absent.
  • Arbitral Award (07‑07‑2014): The arbitrator, relying on the limited material, awarded the claimant Rs 2,57,92,000 with interest at 12% from 02‑12‑2010 until realisation, payable within six months, and directed respondents to pay Rs 6,04,000 as costs.
  • Section 34 Petitions: Respondents 1 and 2 filed petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (O.P. Nos. 19 and 18 of 2015). The Single Judge allowed O.P. 18 (benefiting the Power Agent, S. Baskaran) and dismissed O.P. 19 (against the appellant), holding that an agent cannot be personally liable under Section 230 of the Contract Act, 1872.
  • Appeal: Mrs. B. Anubhama appealed the dismissal of O.P. 19, challenging both the Single Judge’s order and the arbitral award. Arguments raised included:
  • Violation of natural justice – the arbitrator proceeded ex parte after issuing only a single notice.
  • Insufficiency of hearing – no reasonable opportunity was given to the appellant to present evidence.
  • Patent illegality and public‑policy breach – the award conflicted with the MOU terms.
  • The Single Judge exceeded its jurisdiction by modifying the award (exonerating the Power Agent) rather than merely setting it aside, contrary to the law as it stood in 2017.
  • Cited precedents: Saraswathi Chemicals vs. Balmer Lawrie (2011), Sohan Lal Gupta vs. Asha Devi Gupta (2003), McDermott International Inc. v. Burn Standard Co. (2006), Project Director, NH 45E & 220 vs. M. Hakeem (2021), Gayathri Balasamy vs. I.S.G. Novasoft Technologies (2025), Delta Distilleries Ltd. vs. United Spirits Ltd. (2014), Juggilal Kamlapat vs. General Fibre Dealers Ltd. (1954), Associates Builders vs. DDA (2015).
  • Court’s Reasoning: The High Court held that:
  • The Single Judge’s modification of the award amounted to an unlawful exercise of jurisdiction, as Section 34 courts may only set aside or correct clerical errors, not alter substantive liability.
  • The arbitral award was rendered without a fair hearing, violating Sections 18 and 24 of the Arbitration Act and fundamental principles of natural justice.
  • The award was therefore perverse and contrary to public policy.

Final Outcome

  • The order dated 09‑11‑2017 dismissing O.P. 19 is set aside.
  • The arbitral award dated 07‑07‑2014 is also set aside.
  • The dispute is remitted for fresh adjudication before the same arbitrator or a newly appointed arbitrator, in accordance with the arbitration agreement or applicable law.
  • The newly appointed arbitrator must afford both parties adequate opportunity to file pleadings, adduce evidence, and make oral submissions before delivering a reasoned award.
  • No costs were awarded to either side.
  • The connected miscellaneous petition is closed.

Topics: Arbitration, Real Estate, Court Judgment