DLF to pay Rs 80 cr to law firm for rescinding from agreement

An Arbitral Tribunal said that it was evident that DLF had breached its obligations under the contract only in order to make profits

Real estate major DLF Ltd has been directed to pay nearly Rs 80 crore to a private company for rescinding from an agreement for construction and sale of a tower in Gurgaon, by an Arbitral Tribunal which said it breached contractual obligations to make profits.

The tribunal's bench, presided by Justice (retd) A P Shah, directed the real estate firm to pay a compensation of Rs 50 crore and also refund Rs 26.53 crore already paid to it by IP Support Services (India) Pvt Ltd which had entered into an agreement with it to purchase a tower in one of its projects.

DLF, in its defence, had claimed that terms of agreement were consciously and voluntarily entered into by the parties and the claimant had clearly understood that building plans regarding the proposed project were tentative and were subject to change.

According to the complainant law firm, it had entered into an agreement with DLF in 2010, for the construction and sale of a standalone Tower in Phase V (opposite the Golf Course) in Gurgaon.

However, within nine months of signing the deal and after having received 25 per cent of total sale consideration of over Rs 100 crores, DLF Ltd sought to unilaterally terminate the agreement.

While asking DLF to also pay Rs three crore as costs of proceedings to the claimant within eight weeks, the tribunal said, "It is evident that the respondent (DLF) had breached its obligations under the contract only in order to make profits. Therefore, conduct of respondent is clearly blameworthy..."

The bench, also comprising Justices (retd) R P Bhatt and M L Varma, noted that the law firm had already paid more than Rs 26 crores and rejected the contention of DLF that the claimant firm should have accepted alternate properties offered to it.

"It had kept the balance amount of over 80 crores as FDRs/ mutual funds at insistence of DLF. Therefore, it is an unreasonable proposition to expect the claimant to look for other properties.

"The claimant is also not bound to accept any alternative sites as suggested by the respondent. Therefore, the argument of the respondent of alleged failure on the part of claimant to mitigate losses is liable to be rejected," the tribunal said in its May 21 order.