Dismissed

Tablespace Technologies Pvt. Ltd. v. Joyson Safety Systems India Pvt. Ltd.

Karnataka HC23 Aug 2024CMP/262/2024

Case brief

AI extract

What is this about?

Petition under Section 11 of the Arbitration and Conciliation Act to appoint an arbitrator over disputes arising from a letter of intent for managed workspace. The court held the petitioner should first approach the named Arbitration & Conciliation Center of Karnataka under Clause 12 and dismissed the petition with liberty to do so.

What did the court decide?

Liberty reserved to parties to approach the Arbitration & Conciliation Center of Karnataka under Clause 12 of the Letter of Intent dated 15.05.2023.

Tablespace Technologies Pvt. Ltd. Vs Joyson Safety Systems… — Arbitration | Karnataka HC (2024)

¶1

1 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶2

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶3

DATED THIS THE 23^RD DAY OF AUGUST, 2024

¶4

BEFORE

¶5

THE HON'BLE MR JUSTICE ASHOK S.KINAGI

¶6

CIVIL MISC. PETITION NO. 262 OF 2024

¶7

BETWEEN:

¶8

TABLESPACE TECHNOLOGIES PVT. LTD. A COMPANY REGISTERED UNDER THE COMPANIES ACT 2013, HAVING REGISTERED OFFICE AT NO. 46, LEVEL 5, PRESTIGE TRADE TOWER, PALACE ROAD, SAMPANGI NAGAR, BENGALURU-560 001, REPRESENTED BY ITS AUTHORIZED SIGNATORY, MR. MANIBABU KRISHNAN.

¶9

…PETITIONER

¶10

(BY SRI. PRASHANTH MURTHY S.G., ADVOCATE)

¶11

AND:

¶12

Digitally signed by R DEEPA Location: HIGH COURT OF KARNATAKA

¶13

JOYSON SAFETY SYSTEMS INDIA PVT. LTD. A COMPANY REGISTERED UNDER THE COMPANIES ACT 1956, HAVING REGISTERED OFFICE AT PLOT NO. 20, SECTOR 5, IMT MANESAR, GURGAON, HARYANA-122050. REPRESENTED BY ITS DIRECTOR

¶14

…RESPONDENT

¶15

(BY SRI. CHRISTOPHER E., ADVOCATE)

¶16

THIS CMP IS FIELD UNDER SECTION 11(5) & (6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 PRAYING TO APPOINT AN ARBITRATOR TO ADJUDICATE UPON THE

¶17

2 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶18

DISPUTES THAT HAVE ARISEN BETWEEN THE PETITIONER AND RESPONDENTS AS PER CLAUSE 12 OF THE LETTER OF INTENT DATED 15.05.2023 (ANNEXURE-B); AND ETC.

¶19

THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

¶20

CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI

¶21

ORAL ORDER

¶22

The petitioner filed this Civil Miscellaneous Petition under Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996, invoking Arbitration Clause No.12 of the Letter of Intent (LOI) dated 15.05.2023, vide Annexure-B, to resolve the dispute that arose between the petitioner and respondent.

¶23

Brief facts leading rise to filing of this petition are as under:

¶24

The petitioner and respondent have executed letter of intent (LOI) dated 15.05.2023, for providing managed workspace ("demised premises"). One of the terms of the said LOI prescribed the execution of a sub-lease agreement. To expedite the project work based on the

¶25

3 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶26

instructions of the respondent and given the stringent timelines to handover the demised premises, the parties inter alia engaged in discussion relating to the layout plan and fit-outs immediately after the execution of LOI. The respondent actively participated in the deliberation pertaining to the layout plans and also provided its inputs/suggestions on the layout plans, as well as the 3D renders. The respondent gave its in-principle approval for the layout plan on 25.05.2023. Although the terms of sub-lease agreement, were still being negotiated amongst the parties, the petitioner in a good faith commenced the fit-out and other works at the demised premises, the respondent was also appraised of the fact that the petitioner was placing purchase orders/work orders with the vendors and contractors for the fit-out works by way of weekly update meetings. After discussion and negotiation, in connection to the sub-lease agreement, the petitioner issued e-mail dated 24.07.2023, requesting the respondent to finalize the terms of sub-lease agreement, since the parties have been negotiating upon the same for

¶27

¶28

NC: 2024:KHC:34161 CMP No. 262 of 2024

¶29

considerable time. The respondent abruptly issued an e-mail communication dated 27.07.2023, asking the petitioner to stop the fit-out works. In view of the foregoing, a dispute arose between the petitioner and respondent. The petitioner tried to amicably resolve the issue of payment of outstanding claims with the respondent. The petitioner issued a notice of dispute dated 15.12.2023, to the respondent calling upon it to make payments in lieu of costs incurred by the petitioner pursuant to the LOI and loss incurred. The respondent issued reply notice dated 22.01.2024, to deny its liability.

¶30

The petitioner issued a rejoinder notice dated 09.02.2024, to the reply letter. The petitioner having no other option, was constrained to issue legal notice/dispute notice dated 16.04.2023. The respondent failed to respond to the notice of dispute dated 16.04.2023. Hence the petitioner invoked the arbitration agreement as provided under Clause-12 of the LOI and issued a notice on 02.05.2024, for invocation of arbitration agreement under Section 21 of

¶31

¶32

NC: 2024:KHC:34161 CMP No. 262 of 2024

¶33

the Act of 1996. Accordingly, the petitioner has filed this petition.

¶34

The respondent filed statement of objections. It is contended that the petition filed by the petitioner is not maintainable and there is no arbitral dispute under the terms of LOI. It is contended that as per Clause-12, if a dispute arises in connection with the LOI or sub-lease agreement for the performance, validity or enforceability of dispute, either party shall give written notice of dispute. On service of notice, parties shall attempt to resolve the dispute. If not resolved within seven days, the dispute shall be submitted to the Arbitration and Conciliation Center of Karnataka. It is contended that, the petitioner without exhausting Clause-12 of the LOI, has filed this petition. It is contended that the allegation made by the petitioner is not within the arbitration agreement. Hence the petition filed by the petitioner is not maintainable and liable to be dismissed. It is stated that the arbitration clause in the LOI nominates a designated institution

¶35

¶36

NC: 2024:KHC:34161 CMP No. 262 of 2024

¶37

(Arbitration and Conciliation Center, Karnataka) to

¶38

adjudicate upon the dispute under the LOI. The appointment shall be made by any institution designated by the Court. It is contended that Clause (c) Sub-section (6) of Section 11 of the Act of 1996, stipulates that if the named institution fails to perform its function, then a party may request the Court, or the institution designated, to take necessary measures. The petitioner without approaching the named arbitration institution and without exhausting its remedy, filed the petition. Hence prayed to dismiss the petition.

¶39

Heard learned counsel for petitioner and learned counsel for respondent.

¶40

Learned counsel for the petitioner submits that the petitioner and respondent have executed letter of intent dated 15.05.2023, and it was mutually agreed between the parties that a sub-lease agreement shall be executed within 30 days from the date of execution of LOI. She submits that the petitioner in a good faith commenced

¶41

7 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶42

the fit-out and other works at the demised premises and the representative of the respondent visited the demised premises from time to time to monitor the progress of work. The petitioner issued an e-mail communication dated 24.07.2023, requesting the respondent to finalize the terms of sub-lease agreement. The respondent replied to the e-mail dated 24.07.2023, on 27.07.2023. The petitioner has terminated the lease deed executed by it with the land owner of the premises resulting in forfeiture of the security deposit paid by the petitioner. The petitioner got issued a disputed notice dated 15.12.2023, calling upon the respondent to make payments in lieu of the costs incurred by the petitioner. The respondent replied and the petitioner issued a rejoinder notice. Hence the petitioner invoked arbitration clause. Hence the petition filed by the petitioner is maintainable. On these grounds, prays to allow this petition.

¶43

6. Per contra, learned counsel for the respondent

¶44

submits that the petition filed by the petitioner is not

¶45

8 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶46

maintainable. As per Clause-12 of the LOI, the parties for any reason unable to resolve the dispute within seven days of service of dispute notice, the dispute shall be submitted to the arbitration and conciliation center of Karnataka under the Act of 1996. He submits that the petitioner without exhausting the efficacious remedy, filed this petition. Hence he submits that the dispute raised by the petitioner does not fall within the purview of the LOI. Hence he submits that the petitioner may be directed to approach the Arbitration & Conciliation Center, Karnataka. In order to buttress his argument, he has placed reliance on the judgment of Delhi High Court in SUSHIL KUMAR BHARDWAJ VS. UNION OF INDIA in AA 389/2006, disposed of on 17.03.2009 , and also placed reliance on the judgment of Hon'ble Apex Court in the case of SBI GENERAL INSURANCE CO. LTD. VS. KRISH SPINNING reported in 2024 SCC ONLINE SC 1754 . Hence, on these grounds, prays to dismiss this petition.

¶47

9 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶48

Perused the records and considered the

¶49

submissions made by learned counsel for the parties.

¶50

The point that arise for my consideration is,

¶51

whether the petition filed by the petitioner without exhausting the remedy as per Clause-12 of the LOI, is maintainable?

¶52

It is not in dispute that the petitioner and respondent executed the LOI dated 15.05.2023, for providing managed workspace for an area measuring 19,969 sq.ft. It was also mutually agreed between the petitioner and respondent that the parties should execute a sub-lease agreement within 30 days from the date of execution of the LOI. There was a deliberation between the petitioner and respondent in regard to execution of sub-lease agreement. The said deliberation did not work out. The petitioner sent an e-mail dated 24.07.2023, requesting the respondent to finalize the terms of sublease agreement. On 27.07.2023, the respondent issued reply to the email dated 24.07.2023. The dispute arose

¶53

10 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶54

between the petitioner and respondent and they started exchanging notice of dispute, reply and rejoinder notice. The petitioner invoked the arbitration clause. In order to consider the case in hand, it is necessary to examine the arbitration Clause No.12 of the LOI, which reads as under:

¶55

"If a dispute arises out of or in under this LOI or sub-lease agreement for the performance, validity or enforceability of it (dispute), then, either party shall give to the other written notice of dispute, setting out its nature and full particulars (dispute notice), together with relevant supporting documents. On service of disputed notice, the parties shall attempt in good faith to resolve the dispute. If parties are, for any reason, unable to resolve the dispute, within seven days of service of disputed notice, the dispute shall be submitted to the Arbitration & Conciliation Center of Karnataka, under the Arbitration & Conciliation Act, 1996. The place and seat of arbitration shall be Bangalore and the language of arbitration shall be in English."

¶56

(emphasis supplied)

¶57

Though the petitioner has issued a dispute

¶58

notice setting out its nature and full particulars together with relevant supporting documents, on service of disputed notice, the respondent replied to the dispute notice and thereafter the petitioner issued a rejoinder to the reply notice. The parties were unable to resolve the

¶59

11 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶60

dispute within seven days of service of dispute notice. The petitioner could have approached the Arbitration & Conciliation Center of Karnataka as per Clause-12, which is a designated arbitral institution and initiative of and being run under the aegis of the High Court of Karnataka can appoint an arbitrator, if any of the parties individually

¶61

or both parties jointly were to approach the center, for such appointment. Since the arbitration clause refers to the rules of the said center, the procedure to be followed for such appointment in terms of the Rules of 2012. The Co-ordinate Bench of this Court in the case of CATERPILLAR

¶62

FINANCIAL SERVICES INDIA VS. RADHE SHYAM SINGH &

¶63

ORS., in CIVIL MISC. PETITION NO. 599/2022 , disposed on 30.09.2022, framed one of the point for determination as under:

¶64

"Whether the Arbitration & Conciliation center run under the aegis of High Court of Karnataka can appoint an arbitrator if a party were to approach it since the arbitration clause refers to the said center?"

¶65

12 - NC: 2024:KHC:34161 CMP No. 262 of 2024

¶66

The said point was answered holding that if arbitration clause makes the rules applicable, then the Arbitration and Conciliation Center which is a designated arbitral institution can appoint an arbitrator. The petitioner without exhausting the efficacious remedy has filed this petition. Hence the petition filed by the petitioner is not maintainable. Accordingly, I proceed to pass the following:

¶67

ORDER

¶68

The Civil Miscellaneous Petition is

¶69

dismissed.

¶70

Liberty is reserved to the parties to approach the Arbitration & Conciliation Center of Karnataka under the Arbitration & Conciliation Act, 1996, as per Clause 12 of the Letter of Intent dated 15.05.2023.

¶71

SD/(ASHOK S. KINAGI) JUDGE

¶72

Tablespace Technologies Pvt. Ltd. v. Joyson Safety Systems India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Tablespace Technologies Pvt. Ltd. v. Joyson Safety Systems India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Sri a Gnananandhan Vs Dhruthi Infra Projects Limited

S. Ramakrishna Rai Vs Smt.Kasturi

Sri Abdul Saleem Vs the Commissioner

P B Durgappa Vs Smt Siddaveeramma

Smt. Nagarathna H R Vs the State of Karnataka

Caterpillar Financial Services India Private Limited Vs Avipriyansh Construction Pvt. Ltd.