M/S Adi Developers Vs Sri B a Rajagopal — Arbitration | Karnataka HC (2025)

M/S Adi Developers Vs Sri B a Rajagopal — Arbitration | Karnataka HC (2025)

What the court decided

AI extract

Outcome

CMP allowed; dispute referred to Bengaluru Mediation Centre with parties to appear before the Director at 02.30 p.m. on 11.12.2025; on failure of mediation, referred to arbitration with Sri. N.C.Srinivasa, former District Judge, appointed sole arbitrator under the Arbitration Centre attached to the High Court of Karnataka.

Issue for consideration

Whether the Court should nominate an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 notwithstanding the respondent's contention that the GST payment claim is not arbitrable and that Clause 28 of the Joint Development Agreement deals only with sales tax and service tax, not GST.

Court's answer

Since the Joint Development Agreement is governed by an arbitration clause and there is no dispute as regards the agreement itself, the question whether GST forms part of Clause 28 is for the arbitrator to adjudicate and cannot be a ground to refuse appointment of an arbitrator.

Ratio / Principle

The CMP is allowed; the matter is first referred to the Bengaluru Mediation Centre (parties to appear before the Director at 02.30 p.m. on 11.12.2025), and in the event mediation is unsuccessful, to arbitration before Sri. N.C.Srinivasa, a former District Judge, appointed as sole arbitrator under the aegis of the Arbitration Centre attached to the Court.

Detailed headnote1 paragraphs

Arbitration – Appointment of arbitrator – Section 11(6), Arbitration and Conciliation Act, 1996 – Joint Development Agreement dated 02.09.2013 containing arbitration clause (Clause 34) – Petitioner invoked the clause by notice dated 25.06.2024; respondent contended the GST payment claim was not arbitrable and that Clause 28 covered only sales tax and service tax, not GST – Held: with the agreement itself undisputed and governed by an arbitration clause, the question whether GST falls within Clause 28 is for the arbitrator to adjudicate and cannot be a ground to refuse appointment – Petition allowed; matter first referred to Bengaluru Mediation Centre (parties to appear 11.12.2025), failing which to arbitration before Sri. N.C.Srinivasa, former District Judge, sole arbitrator, under the Arbitration Centre attached to the Court.

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NC: 2025:KHC:49767 CMP No. 429 of 2024

HC-KAR

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 28^TH DAY OF NOVEMBER, 2025

BEFORE

THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ CIVIL MISC. PETITION NO. 429 OF 2024

BETWEEN:

M/S. ADI DEVELOPERS R/O FLAT NO. 501, 8-3-11-5/2/1, ADI HILLS, KESAVA NAGAR, SRINAGAR COLONY, HYDERABAD- 500073, ANDHRA PRADESH REP BY ITS MANAGING PARTNER SATHI ADI REDDY AND SATHI ANITHA REDDY

…PETITIONER

(BY SRI. SHIVAREDDY K. N., ADVOCATE)

AND:

SRI B A RAJAGOPAL S/O A G ASHWATHAIAH (LATE) NO 88, GOWRI SHANKARA NILAYA AMRUTHALLI MAIN ROAD BENGALURU 560092

Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA

…RESPONDENT

(BY SRI. M.D. RAJKUMAR., ADVOCATE)

THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996 PRAYING THAT THIS HONBLE COURT BE PLEASED TO NOMINATE A DESIGNATED ARBITRATOR, AS PER THE SATISFACTION OF THIS HONBLE COURT IN TERMS OF SEC 11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996, IN THE INTEREST JUSTICE.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ

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NC: 2025:KHC:49767 CMP No. 429 of 2024

HC-KAR

ORAL ORDER

The petitioner is before the court seeking for the following relief:

"WHEREFORE, the petitioner prays this Hon'ble Court be pleased to nominate a designated Arbitrator, as per the satisfaction of this Hon'ble Court in terms of Clause 34 of Joint Development Agreement dated 02.09.2013 as per Annexure-A under the provisions of Sec 11(6) of the Arbitration and Conciliation Act 1996, in the interest justice."

The petitioner and the respondent had entered into a Joint Development Agreement on 02.09.2013. The said Joint Development Agreement is governed by an arbitration clause in terms of clause 34 thereof, which is extracted hereunder for easy reference:

"Any dispute or difference which may arise between the PARTIES herein with regard to the intents and meaning of this Agreement or its interpretation or any part thereof or any matters relating to the agreement shall be referred for Conciliation as provided for in the Indian Arbitration and Conciliation Act, 1996, or as amended from time to time, and the decision of the Arbitral Tribunal shall be final and binding on the PARTIES."

The petitioner having invoked the arbitration clause and

issued a notice on 25.06.2024 nominating its arbitrator, the respondent replied to the said notice on 24.07.2024 contending that the dispute as regards payment of tax was not be arbitrable. There being no particular

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NC: 2025:KHC:49767 CMP No. 429 of 2024

HC-KAR

agreement between the parties. In that background, the petitioner had approached this Court.

Notice having been ordered, the respondent has entered an appearance.

The submission of the counsel for the respondent before this Court also is that there is no particular clause in the agreement indicating that the respondent would be liable to meet payment of goods and services tax as claimed by the petitioner and the clause in relation to payment of tax, namely clause 28, only deals with sales tax and service tax and not GST.

There being no dispute as regards the Joint Development Agreement which has been entered into between the parties and the said Joint Development Agreement being governed by an arbitration clause, the aspect of whether GST is part of clause 28 or not would be required to be adjudicated by the arbitrator. It cannot be a ground not to appoint an arbitrator as contended by the learned counsel for the respondent.

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NC: 2025:KHC:49767 CMP No. 429 of 2024

HC-KAR

At this stage, the counsel for the respondent submits that the matter may be first referred to mediation and thereafter to arbitration so as to enable the parties to explore the possibility of settlement. The counsel for the petitioner concurs with the said submission. In that background, I pass the following:

ORDER

i) The CMP is allowed .

ii) The matter is referred to Bengaluru Mediation Centre. The Director, Mediation Centre is requested to depute a Mediator to resolve the dispute between the parties amicably.

iii) Since the order is passed in the presence of both the counsel, the parties shall appear at 02.30 p.m. on 11.12.2025 before the Director, Bengaluru Medication Center.

iv) In the event of mediation not being successful, the matter is referred to Arbitration.

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NC: 2025:KHC:49767 CMP No. 429 of 2024

HC-KAR

v) Sri. N.C.Srinivasa, a former District Judge of the District Judiciary is appointed as a sole Arbitrator to arbitrate the dispute between the parties under the aegis of the Arbitration Centre attached to this Court.

SD/(SURAJ GOVINDARAJ) JUDGE

GJM List No.: 1 Sl No.: 39