Allowed

Sheth Corp Private Limited v. Susheelamma Alias Susheela N Reddy

Karnataka HC14 Aug 2024CMP/576/2021

Case brief

AI extract

What is this about?

The High Court allowed the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996. Citing the arbitration clause in the 2014 Memorandum of Understanding between Sheth Corp Private Limited and the respondents, the bench appointed S.B. Muchandi as sole arbitrator to adjudicate the dispute regarding property development and delays.

What did the court decide?

The petitioner's petition was allowed and Mr. S. B. Muchandi, Retired District Judge, was appointed as the sole arbitrator.

Sheth Corp Private Limited Vs Susheelamma Alias Susheela N Reddy — Arbitration | Karnataka HC (2024)

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NC: 2024:KHC:32805 CMP No. 576 of 2021

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14^TH DAY OF AUGUST, 2024 BEFORE

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THE HON'BLE MR JUSTICE ASHOK S.KINAGI CIVIL MISC. PETITION NO. 576 OF 2021

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BETWEEN:

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SHETH CORP PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES, ACT, 1956, HAVING ITS REGISTERED OFFICE AT:

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-GROUND AND THIRD FLOOR, PRIUS INFINITY PARANJE B SCHEME SUBHASH ROAD, VILE PARLE (EAST) MUMBAI-400057.

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REPRESENTED HEREIN BY ITS AUTHORISED SIGNATORY MR. NATESH MAHADEVAN

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…PETITIONER

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Digitally signed by R DEEPA Location: HIGH COURT OF KARNATAKA

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(BY SRI. JACOB ALEXANDER, ADVOCATE FOR SRI. SUNDARA RAMAN M V., ADVOCATE)

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AND:

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SUSHEELAMMA ALIAS SUSHEELA N. REDDY AGED ABOUT 67 YEARS, W/O LATE SRI. C. NARAYANA REDDY

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N. SWAROOP KUMAR AGED ABOUT 45 YEARS, S/O LATE SRI. C. NARAYANA REDDY

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NC: 2024:KHC:32805 CMP No. 576 of 2021

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N. SHASHANK KUMAR

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AGED ABOUT 37 YEARS, S/O LATE SRI. C. NARAYANA REDDY

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ALL RESIDING AT: "SWAROOP KUMAR GARDEN" BANNERGHATTA ROAD HULIMAVU VILLAGE AND POST, ADJACENT TO MEENAKSHI TEMPLE BANGALORE-560076.

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…RESPONDENTS

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(BY SRI. M.S.RAGHAVENDRA PRASAD, ADVOCATE FOR R1 TO R3)

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THIS CIVIL MISC. PETITION IS FILED UNDER SECTION 11(5) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO I. APPOINT A SOLE ARBITRATOR AS THIS HON'BLE COURT MAY DEEM FIT AND REFER THE DISPUTES BETWEEN THE PARTIES TO ARBITRATION UNDER THE MEMORANDUM OF UNDERSTANIDNG DATED 26/09/2014 VIDE ANNEXURE-A. II. GRANT SUCH OTHER RELIEF OR RELIEFS AS THIS HON'BLE COURT MAY DEEM FIT, IN THE INTEREST OF JUSTICE AND EQUITY.

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

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CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI

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ORAL ORDER

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This Civil Miscellaneous Petition is filed under

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Section 11(6) of the Arbitration and Conciliation Act, 1996,

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for appointing an Arbitrator to resolve the dispute between

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NC: 2024:KHC:32805 CMP No. 576 of 2021

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the petitioner and respondents in terms of clause No.17 of the Memorandum of Understanding dated 26.09.2014 vide

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Annexure "A".

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

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The petitioner entered into a Memorandum of Understanding dated 26.09.2014 with the respondents to develop the respondents' property into composite complex, comprising of both residential and commercial buildings. In terms of Memorandum of Understanding certain conditions precedent were to be fulfilled by the respondents prior to the commencement of the construction on the property. In light of the assurance and representations, the petitioner paid a sum of Rs.6,30,00,000/- to the respondents. After the execution of Memorandum of Understanding, there was an inordinate delay on the part of the respondents in undertaking and

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fulfilling the conditions incumbent upon them. The respondents took three years in obtaining the conversion

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4 - NC: 2024:KHC:32805 CMP No. 576 of 2021

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of the property. The respondents, after there was an inordinate delay in implementing the project and due to financial calculation of the petitioner, all these factors have seriously prejudiced the petitioner for no fault on his part. The respondents after the unexplainable, inordinate delay of nearly four years from the execution of Memorandum of Understanding and over seven months after obtaining the conversion certificate for schedule property, informed the petitioner that they have obtained the BBMP Khatha in respect of the property on 03.04.2018. Upon securing the khatha, the respondents failed to execute joint development agreement, despite several reminders. It is contended that after six years of inordinate delay, in executing the agreed conditions mentioned in Memorandum of Understanding, the respondents raised unreasonable and untenable demands, seeking to change the nature of the project. In the month of March 2021, it was brought to the attention of the petitioner that the respondents have been making efforts to create the third party rights over the petition schedule property and defeat

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NC: 2024:KHC:32805 CMP No. 576 of 2021

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the petitioner's rights on the memorandum of understanding. The petitioner aggrieved by the inaction on the part of the respondents, approached the Civil Court under section 9 of the Arbitration and Conciliation Act, 1996 numbered as AA No.84 of 2021, wherein the Civil

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Court passed an ad interim injunction restraining the respondents from alienating the property or parting with the possession of the same. Thus serious dispute have arisen between the parties under Memorandum of Understanding, which are arbitrable under the terms thereof. The petitioner issued notice dated 14.06.2021, invoking arbitration clause under the MOU. The respondents replied on 02.07.2021, rejecting the petitioner's nomination of an arbitrator. Hence this petition.

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Heard the learned counsel for the petitioner and also learned counsel for the respondents appearing through video conference.

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NC: 2024:KHC:32805 CMP No. 576 of 2021

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Learned counsel for the petitioner submits that

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the petitioner and the respondents have entered into Memorandum of Understanding for development of respondents' property and the respondents have not completed the work within the time stipulated in Memorandum of Understanding. Further, the respondents are trying to create the third party interest over the property. Hence, the petitioner approached the civil court in AA No.84 of 2021 and the civil court was pleased to pass an ad interim order of temporary injunction restraining the respondents from alienating the suit schedule property and alienating the property in question. It is also submitted that the respondents have failed to fulfil their obligations under the Memorandum of Understanding. The petitioner issued a notice to respondents on 14.06.2021, under Section 11(6) of the Arbitration and Conciliation Act 1996. It is submitted that the respondent did not agreed to the nomination of the arbitrator suggested by the petitioner. Hence, on this ground he prays to allow the petition.

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Per contra learned counsel for the respondents

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submits no objection to allow the petition.

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Perused the records and considered the submissions which is relevant.

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The point that arises for consideration is, whether

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the petitioner has made out a ground to refer the dispute between the parties to the Arbitrator as per clause No.17 of the MOU dated 26.09.2014 ?

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It is not in dispute that the petitioner and respondents have entered into Memorandum of

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Understanding for development of respondents' property on 26.09.2014. It is the case of petitioner that, the respondents have not completed the work within the time fixed in the Memorandum of Understanding. The respondents tried to create third party interest in the property in question. The petitioner approached the Civil

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Court in a AA No.84 of 2021 and obtained ad interim order of injunction restraining the respondents from alienating or parting with property in question. There is an arbitration

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NC: 2024:KHC:32805 CMP No. 576 of 2021

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clause in Memorandum of Understanding, i.e., clause No.17 which reads as under;

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DISPUTE RESOLUTION

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” 17.1 In the event of any disputes or differences arising in relation to this MoU, its interpretation, performance or any other matter the same shall be decided by mutual discussion between the Parties. Either of the Parties shall be entitled to raise such question in writing in a letter addressed to the other Party and the Parties shall meet and use good faith efforts to resolve such dispute or differences within a reasonable time.

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17.2 In the event of disparties being unable to resolve the dispute by mutual conciliation as above, the disputes shall be referred by either party to arbitration by a panel comprising of a Sole Arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and shall be decided by such Arbitral Tribunal.

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17.3 All proceedings of the arbitration shall be conducted in English;

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17.4 The arbitral award shall be final and binding on the Parties, and the Parties agree to be bound thereby and to act accordingly, however subject to the other provisions of the Arbitration and Conciliation Act 1996.

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17.5 The seat of such arbitration shall be at Bangalore.

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17.6 The arbitral proceedings shall be governed by the provisions of the Arbitration and Conciliation Act, 1996, or any statutory

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NC: 2024:KHC:32805 CMP No. 576 of 2021

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modification or re-enactment thereof for the time being in force."

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On perusal of clause 17, if any dispute or

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difference arises in relation to this Memorandum of Understanding, the parties shall be entitled to raise such questions to the arbitration comprising sole arbitrator in accordance with the provisions of Arbitration and Conciliation Act 1996 and shall be decided by the such Arbitration Tribunal. The petitioner vide clause No.17 of the Memorandum of Understanding, by issuing notice on 14.06.2021, nominated the name of Sri.Siddalingesh, Retired District and Sessions Judge, as a sole arbitrator for adjudication of the dispute in terms of clause No.17.2 of Memorandum of Understanding. The respondents responded to the said legal notice on 02.07.2021, wherein respondents have nominated the name of Sri. Kukkaje Ramakrishna Bhat, a Retired District and Sessions Judge to act as sole Arbitrator. As per the agreement between petitioner and respondent, there exist an arbitration

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NC: 2024:KHC:32805 CMP No. 576 of 2021

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clause, hence, the petitioner has made out the case to refer the matter to the arbitrator.

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In view of the above discussion, the petition is allowed . Sri.B.A.Muchandi, Retired District Judge is appointed as sole Arbitrator.

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Office is directed to forward a copy of this order to Sri.B.A.Muchandi, Retired District Judge and to the Arbitration and Conciliation Center, Bengaluru.

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Sd/(ASHOK S.KINAGI) JUDGE

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AKV CT:SK

Sheth Corp Private Limited v. Susheelamma Alias Susheela N Reddy

Case brief

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What did the court decide?

Sheth Corp Private Limited v. Susheelamma Alias Susheela N Reddy

Case brief

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