M/S Jaaji Developers Vs M/S Coffee Board Employees Co. Operative Housing Society

REPRESENTED BY ITS PROPRIETOR SRI B S HEMANTH KUMAR AGED ABOUT 58 YEARS S/O SRI N SRINIVASA MURTHY FLAT NO H-003/004 KRISHNA DIAMOND APARTMENT CITY CENTRAL LIBRARY ROAD A BLOCK, SAHAKARANAGARA BENGALURU 560092

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(BY SRI. T M VENKATA REDDY, ADVOCATE)

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…PETITIONER

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AND:

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M/S COFFEE BOARD EMPLOYEES CO-OPERATIVE HOUSING SOCIETY

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NO 1, DR. B R AMBEDKAR VEEDHI BENGALURU 560001

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REP. BY ITS PRESIDENT AND SPECIAL OFFICER

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M/S COFFEE BOARD EMPLOYEES CO OPERATIVE HOUSING SOCIETY

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NO 1, DR. B R AMBEDKAR VEEDHI

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NC: 2025:KHC:9836 CMP No. 232 of 2024

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BENGALURU 560001 REP. BY ITS PAID SECRETARY

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…RESPONDENTS

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(BY SRI. A. DEVARAJA, ADVOCATE FOR R2 R1 IS SERVED)

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THIS CIVIL MISC. PETITION IS FILED UNDER SECTION 11(6) (A) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO A) TO APPOINT AN ARBITRATOR TO RESOLVE THE EXISTING DISPUTES BETWEEN BOTH PARTIES HEREIN IN TERMS OF THE ARBITRATION CLAUSES CONTAINED IN THE MEMORANDUM OF UNDERSTANDING DATED 09/08/2006 (CLAUSE NO.16), MEMORANDUM OF UNDERSTANDING DATED 31.01.2007 (CLAUSE NO.17) AND OTHER MOU’S AND TO ENHANCE THE RATE OF VALUE OF THE LAND AND FOR ITS VALUE OF THE DEVELOPMENTAL WORKS, FOR THE LAYOUTS MADE. B) GRANT SUCH OTHER OR FURTHER RELIEFS MAY DEEM FIT IN THE CIRCUMSTANCES OF THE CASE ALONG WITH BY AWARDING COSTS OF LITIGATION, IN THE INTERESTS 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 Section

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

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the appointment of an Arbitrator to resolve the disputes arising between the parties in terms of the Clauses contained in the Memorandum of Understanding (for short ‘MOU’) dated 09.08.2006 (Clause No.16) and 31.01.2007

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(Clause No.17) vide Annexures-A and A1.

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

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The petitioner is a Developer for the procurement of lands for development purposes, with the intention of forming the residential layouts and allot the sites to its members. Respondent No.1 (Coffee Board Employees Co-operative Housing Society- CBECHS) is a society registered under the Co-operative Societies Act, intending to form residential layouts and to allot the sites to its members/Coffee Board Employees to needy persons. Respondent No.2 is the secretary, to execute deeds, etc., in favour of third parties as per the directions of Respondent No.1 and its committee members and the powers vested as per clause 55 of the bylaws of Respondent No.1.

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After deliberations and admissions between

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both parties, on the instructions, resolutions were made by respondent No.1 and its committee. On the instructions, respondent No.2 entered into an MOU with the petitioner

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on 09.08.2006, on the stipulated conditions, with an intention to procure the lands for development purposes and to form the residential layouts and allot them to its members of respondents @ Rs.490/- per sq.ft. The petitioner agreed to purchase the lands from its respective owners about 14 acres at Meesaganahalli village, Jala Hobli, Yalahanka Taluk. The respondents paid an advance amount of Rs.15,00,000/- to procure the lands, to form the residential layouts and allot to its members.

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After having entered the MOU dated 31.01.2007, extended the time, for which the petitioner

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has undertaken to procure the additional lands of 16 acres in the aforesaid village, and the respondents have paid an additional enhanced rate on the value of each square feet, which was depicted at Para No.10 of the MOU on 31.01.2007. The petitioner has formed the residential layout at the aforesaid village. A time was extended by executing the memorandum of understanding on different dates. The petitioner had released 60% of sites formed in

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the respective sites layout and remaining 40% of the sites to be released after approval by BIAPPA, BMRDA and the remaining 40% of sites are still pending, and the same may be released after the completion, and obtaining NOC’s from Horticulture, PWD, Panchayath, BESCOM, tree planting, water tank to be completed, two Bore-wells to be installed, Manhole chambers etc. However, the respondents did not pay the amount for the remaining 40% of the expenditure incurred, and did not pay any enhanced rate demanded on each square feet from the beginning, till now as per the MOU. Due to a shortage of lands out of the required lands made in the aforesaid village, the petitioner has undertaken to provide a shortage area of 7 acres, 37 guntas in another place in Chokkanahalli village.

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The respondents agreed to enhance the value of the rate in every renewed MOU’s as per Annexure-A2.

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The petitioner requested the respondents seeking to enhance the site value from the existing value of Rs.490/-

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Sq.ft., to be increased for the S.R Rate on Sq.ft. basis right from 2012. The petitioner issued several

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representations to enhance the value. Out of the enhanced amount of Rs.49,00,00,000/-, the respondents have paid Rs.29,64,93,689/- on various dates, for procuring the lands and to form the residential layouts in the aforesaid village as per MOU. The respondents paid Rs.6,80,00,000/- towards purchasing of lands and to form residential layouts. The petitioner had developed the residential layout and formed the sites.

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The respondents are not ready and willing to

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perform their part of obligations as per the terms and conditions of MOU’s dated 09.08.2006, 31.01.2007, 07.01.2022 and in the other MOU’s executed. Despite granting sufficient opportunity, the respondents have not taken any steps in the matter, and thereby caused heavy loss to the petitioner for 17 years. There is an Arbitration clause in the MOU dated 09.08.2006. The petitioner filed CMP No.332/2023. The said CMP was withdrawn on

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09.01.2024 with the liberty to file a fresh Arbitration proceedings. The petitioner issued a notice under Section 21 of the Arbitration and Conciliation Act, 1996, on 23.02.2024, invoking the Arbitration clause and calling upon the respondents to agree on the name of the Arbitrators proposed by the petitioner and to resolve the dispute between the parties. The said notice was served upon the respondents on 26.02.2024. The respondents neither replied nor complied with the demands made by the petitioner. Hence, this petition.

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Respondent No.2 filed the statement of

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objections, admitting that respondent No.1- Society is the registered society under the provisions of the Karnataka Co-operative Societies Act, 1959 and Rules, 1960 and also admitted regarding the execution of a memorandum of understanding on 09.08.2006 and also the payment of amount of Rs.31,70,49,199/to the petitioner in 2006-2013.

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It is contended that some of the members of

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the respondent i.e., Society lodged a complaint against the respondents and office bearers for violation of the provisions of the Act of 1959 and Rules of 1960, and the complaint was filed for misappropriation of funds before the Deputy Registrar, IV Region, Bengaluru, therefore, the Joint Registrar, Co-operative Society, Bengaluru region under Section 65 of the Act had ordered an enquiry and appointed the Assistant Registrar to conduct the enquiry. The Assistant Registrar of the Co-operative Society conducted an enquiry under Section 65 of the Act. In pursuance whereof, the respondents paid an additional amount of Rs.11,47,68,379/to the petitioner for formation of layout. Hence, prays to dismiss the petition.

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Heard the arguments of the learned counsel for the petitioner, and the learned counsel for respondent No.2.

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Learned counsel for the petitioner submits that

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a Memorandum of Understanding was executed between

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the parties to the proceedings, and the dispute has arisen between the parties to the proceedings. There is an Arbitration clause in the MOU’s and the petitioner issued Arbitration notice, to propose the name of the Arbitrator. Despite service of Arbitration notice, the respondents did not suggest the name of the Arbitrator. Hence, prays to allow the petition.

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Per contra , learned counsel for the respondents submits that some members of the respondent No.1 – Society committed misappropriation of funds and enquiry was held against the members. Hence, on these grounds, prays to dismiss the petition.

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Perused the records, and considered the

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submissions of the learned counsel for the parties.

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The point, that arises for my consideration is as under:

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“Whether the petitioner has made a ground to appoint an Arbitrator to resolve the dispute between the petitioner and respondents as per Clause 16 of the Memorandum of

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understanding dated 09.08.2006 and Clause 17 of MOU dated 31.01.2007 and other MOUs?”

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Point No.1 : It is not in disputed that the

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parties to the proceedings have entered into several Memorandum of Understandings. The petitioner requested

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to enhance sital value, but the respondents did not agree. Though, the dispute has arisen between the parties regarding the terms and conditions of the MOU, admittedly, there is an Arbitration clause in clause 16 of the MOU dated 09.08.2006, which reads as follows:

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That as per the clause: 16 of the MOU dated: 09/08/2006: any disputes arises between the parties have to approach the Arbitrator :-

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Clause: 16 of the Memorandum of Understanding dated: 09/08/2006 reads as follows:

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"In The event of any disputes or differences arising from this MOU, the same shall, unless settled by mutual discussions, be referred to the Arbitration. One each to be appointed by the FIRST PARTY and the SECOND PARTY. Such arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 as in force and as amended from time to time. The decision of the arbitrator shall be final and binding upon the parties. The arbitrators shall pass their award within ninety (90) days from the date of their entering reference or within such other extended time as the parties may mutually agree upon. The venue of the arbitration proceeding shall be Bangalore only."

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Before filing of this instant petition, the

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petitioner filed a petition under Section 11(6) of the Arbitration and Conciliation Act in CMP No.332/2023. The The co-ordinate bench disposed of the Civil Miscellaneous Petition, reserving the liberty in favour of the petitioner to issue fresh Arbitration notice and take recourse to such remedy as available in law, including initiating fresh Arbitration proceedings after issuing requisite Arbitration notice to the respondent in accordance with the law. Pursuant to the order passed by this Court in CMP No.332/2023, the petitioner issued fresh Arbitration notice vide Annexure-D dated 23.02.2024. The said notice was duly served on the respondents. The respondents neither replied to the Arbitration notice nor complied with the terms and conditions. As there are Arbitration clauses in the MOUs, the dispute has to be resolved by an Arbitrator. In view of the above discussion, the petitioner has made out a ground to refer the matter to the Arbitrator for resolving the dispute between the parties in the

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