Court Dismisses Omaxe Ltd.'s Appeal, Orders Refund with Interest Due to Statutory Breach and Delay in Project Completion
In a significant ruling, the Delhi High Court has upheld the termination of an Allotment Agreement between Omaxe Ltd. and Mr. Joginder Singh Nijjar, amidst a prolonged legal battle concerning the 'Omaxe Novelty Mall' project in Amritsar. The court dismissed Omaxe Ltd.'s appeal against a previous judgment which favored the respondents, Mr. Nijjar and others, citing statutory non-compliance and undue delay in project completion as key factors justifying the termination of the agreement.
The dispute, which originated from an Allotment Agreement and Addendum dated May 2, 2008, involved the allotment of a commercial unit in the proposed mall. The respondents had terminated the agreement in 2013, citing non-completion of the project within the stipulated timeframe, and sought a refund of their principal investment along with interest.
The case was referred to arbitration, where the tribunal, led by retired Supreme Court Judge Justice B.S. Chauhan, ruled in favor of the respondents, ordering a refund of Rs. 3,35,04,650 with interest, and dismissing Omaxe Ltd.'s counterclaims. The tribunal's decision was challenged by Omaxe Ltd. under Section 34 of the Arbitration and Conciliation Act, 1996, but the challenge was dismissed by a single judge, prompting the current appeal.
The Delhi High Court, in its judgment dated August 14, 2026, emphasized that while time was not the essence of the contract, the substantial delay and the appellant's failure to comply with statutory requirements justified the termination. The court noted that Omaxe Ltd. had commenced construction without obtaining the necessary No Objection Certificate from the Archaeological Survey of India (ASI), leading to prolonged project suspension.
The High Court rejected Omaxe Ltd.'s argument that the delay constituted a force majeure event, attributing the delay instead to the company's own oversight. The court also upheld the tribunal's award of 14% simple interest for the pre-award period and 12% post-award interest, deeming it appropriate given the circumstances and the appellant's conduct.
The judgment further clarifies that the non-joinder of other co-allottees in the arbitration was not detrimental to the award, as it adjudicated the proportionate rights of the parties involved. The court directed Omaxe Ltd. to deposit the awarded amount with the executing court within one week, with specific instructions regarding the distribution of funds to the respondents.
This ruling underscores the importance of adhering to statutory requirements in real estate projects and sets a precedent for handling similar disputes in the future.
Bottom Line :
Arbitration - Termination of Allotment Agreement due to delay in possession upheld - Time was not the essence of the contract but breach of statutory requirements and suppression of material facts justified termination.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 34, 37; Indian Contract Act, 1872 Sections 54, 55
Omaxe Ltd. v. Joginder Singh Nijjar, (Delhi)(DB) : Law Finder Doc id # 2961243
