TaxTMI 
TaxTMI 
2017 (1) TMI 1856
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....usive of service tax as applicable which will be in addition thereto towards commission and brokerage for providing assistance in completion of a transaction which includes the brokerage." The transaction contemplated takeover of the company having a plot of land in Goa by the purchaser or their nominee. 3. The recitals to the agreement acknowledged that the Petitioner had been "instrumental in letting the first party introduced with a company which has a land in Goa" and further that the Petitioner had "made lot of efforts in providing assistance to the First Party in identifying the following companies, who have a plot of land in Goa." The recitals further stated that the aforementioned sum of Rs. 11.55 crores will be paid towards commission and brokerage for providing the assistance in "completion of the transaction i.e. either taking over of the 'Company' by the purchaser or their nominees" or "sale of the aforesaid plot of land from the Owners/Seller in favour of the Purchaser." The recitals further acknowledged that by letters dated 17th June, 2011 and 28th July, 2011, the Respondents had "acknowledged and confirmed the efforts made by the Second Party and has made....
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....from 15th February, 2012 to 10th December, 2013 and future interest also at 24%. 8. The case of the Respondents on the other hand was that the Petitioner did not do anything after the agreement dated 4th September, 2011 for taking forward the transaction. After the due diligence conducted by the Petitioner, a similar effort was undertaken by the Respondents through their sources which revealed that there were serious defects in the title of the property. As far as taking over the company through acquisition of the shares of WIIPL is concerned, it is contended that the amount equivalent to 25% of the purchase consideration in the sum of Rs. 112.23 crores was deposited in an Escrow account but WIIPL did not perform some of their performances which were conditions precedent in terms of the Share Purchase Agreement. This continued even after the deadline of 14th December, 2011. As a result, the said agreement was terminated by a letter dated 23rd December, 2011. By a letter dated 27th December, 2011, the Petitioner was asked to refund the token sum of Rs. 50 lakhs as the transaction was not completed. 9. Thereafter, the sellers directly approached the Respondents for sale of the ....
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.... a witness and he was also cross-examined. 13. The sole Arbitrator noted that answers given by the claimant in his cross-examination indicated that he did nothing after 4th September, 2011. The Petitioner apparently stated that after the execution of the said agreement, "the only thing I am aware of is the execution of share purchase agreement between the buyer and the seller." He did not know how many such sale purchase agreements had been executed between the buyer and the seller. In response to a specific question whether he had taken any steps for completion of the transaction after 4th September, 2011, the Petitioner answered "I have not taken any further steps for completion of the transaction after 4th September 2011. I was waiting for the execution of the transaction." 14. The learned Arbitrator noted that the Petitioner had offered no help in taking forward the transaction. Among the impediments faced by the Respondents was litigation pending in the Court in respect of the lands in question. The learned Arbitrator concluded that "since there is failure on the part of the claimant in bringing the transaction to its completion and since the Respondents had to act on th....
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.... for merely introducing a potential buyer who is ready, able and willing to buy at or above the price named, whether or not the deal goes through." 18. Mr. Kapur emphasised that as far as the present case is concerned, the deal ultimately went through with the takeover of the WIIPL as well as registration of the sale deed in respect of the land in question in favour of the Respondents. Nothing more was expected to be done by the Petitioner in terms of the agreement. According to Mr. Kapur, the recitals themselves listed out whatever has already been concluded that prior to that date. According to him the recitals also acknowledged that the Petitioner had already rendered services both by way of locating the sellers as well as undertaking due diligence of the land in Goa which formed the subject matter of the agreement. 19. The above plea was resisted by Mr. Arun Monga, learned counsel appearing for the Respondents. He submits that it is inconceivable that a sum of Rs. 11.55 crores would be agreed to be paid only for brokerage. According to him a careful reading of the clause shows that in order to become entitled to the balance sum of Rs. 11.05 crores, the Petitioner was unde....
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....hat the Petitioner had located companies which did have lands in Goa and the names of which were set out in the recitals to the agreement. Therefore, as far as the Petitioner is concerned he had already discharged the above two obligations spelt out in the agreement. 24. It was repeatedly emphasised by Mr. Monga that a sum of Rs. 11.55 crores was not merely for brokerage but also for rendering assistance and that no such assistance for completion of the transaction was in fact rendered by the Petitioner. The agreement appears to proceed on the basis that the Petitioner is entitled to Rs. 11.55 crores, as a specified lumpsum amount, for the services rendered by him in locating the seller i.e., a company which has land in Goa and undertaking due diligence with respect to that land. The Petitioner had already been paid Rs. 50 lakhs on account. What the agreement did was to spell out the circumstances under which either the said sum of Rs. 50 lakhs would become refundable or adjusted. In the event of the latter, the balance sum of Rs. 11.05 would become payable to the Petitioner only upon completion of the transaction between the parties. 25. There were two alternatives spelt out....
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....o retain Rs. 50 lakhs payable only for 'some' services rendered. Either the Petitioner was entitled to the entire sum in terms of the agreement or he was not. If indeed he had rendered those services and if in fact the deal went through, as it did in the present case, the Petitioner would be entitled to the entire sum as agreed. The agreement does not contemplate that the Petitioner would not be entitled to the balance sum of Rs. 11.05 crores if he did not render assistance after the date of the agreement. In deciding to the contrary, the learned Arbitrator appears to have not only deviated from the express terms of the contract but re-written it in a manner of speaking by fastening on to the Petitioner further obligations which were not spelt out therein. 28. Under Section 28(3) of the Act, the learned Arbitrator was bound to render an Award consistent with the clauses of the contract. Under Section 28(2), the Arbitrator shall decide ex aequo et bono only if the parties have expressly authorised it to do so. Further, under Section 28(3) of the Act, there was an obligation on the learned Arbitrator to take into account "the terms of the contract and trade usages applicab....
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....ters not allotted to him, he commits a jurisdictional error (see Associated Engg. Co. v. Govt. of A.P., (1991) 4 SCC 93; and Rajasthan State Mines & Minerals Ltd. v. Eastern Engg. Enterprises, (1999) 9 SCC 283). 12. In this context, a reference can usefully be made to the observations of this Court in Alopi Parshad & Sons Ltd. v. Union of India, AIR 1960 SC 588, wherein it was observed that the Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. The Court went on to say that in India, in the codified law of contracts, there is nothing which justifies the view that a change of circumstances, "completely outside the contemplation of parties" at the time when the contract was entered into will justify a court, while holding the parties bound by the contract, in departing from the express terms thereof. Similarly, in Naihati Jute Mills Ltd. v. Khyaliram Jagannath, AIR 1968 SC 522, this Court had observed that where there is an express term, the court cannot find, on construction of the contract....