BENGALURU: An arbitral tribunal has told DLF, the country's top real estate developer, to pay Rs 50 crore as compensation to a private firm for failing to honour an agreement to build a commercial property in Gurgaon.
The Arbitral Tribunal of Delhi High Court, presided by retired justice Ajit Prakash Shah, the current chairman of the Law Commission of India, on May 21, ordered DLF to pay a total of Rs 94 crore that includes damages compensation, refund of advance amount along with 11 per cent interest per annum and costs of the proceedings, to IP Support Service (India) Ltd for unilaterally terminating an agreement.
If it fails to pay the money in eight weeks, DLF will have to pay a further 15 per cent interest on the total amount, according to the ruling. DLF said it has yet to decide on the future course of action.
"This is a private dispute arising out of contract between two companies and was referred to arbitration. We are awaiting legal advice for further action on this matter," the company told ET in an email response.
CD Kingsly, chief finance officer at Delhi-based IP Support Services, alleged that DLF breached the contract for economic reasons, to take advantage of substantial increase in prices.
"The building should have handed over in 2012 and we would have started earning a rental of Rs 10,000 sq ft plus appreciation cost," he said.
IP, represented by the law firm Remfry & Sagar, said it entered into an agreement with DLF in February, 2010, whereby the latter agreed to sell a standalone tower of approximately 100,127 sq ft to IP at DLF's site in Phase V, Gurgaon.
"Within nine months of signing the agreement and after having received 25 per cent of the total sale consideration amounting to an excess of Rs 26 crore, DLF sought to unilaterally terminate the agreement," it said.
DLF is currently constructing a commercial property, Horizon Center, positioned to be Gurgaon's landmark business commercial and retail hub, in the area. The project is spread over 14 acres. IP Support Services is involved in acquiring, managing, letting out, licensing, providing use of buildings, fixtures and fittings and other infrastructural facilities in the field of intellectual property rights in New Delhi and Gurgaon.