M/S Legacy Global Projects Pvt. Ltd. Vs M/S Estello Properties

M/S LEGACY GLOBAL PROJECTS PVT. LTD. A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT NO.333, THIMMAIAH ROAD, BANGALORE 560052. (REPRESENTED BY ITS AUTHORISED SIGNATORY, MR. RAKESH PRABHU) …PETITIONER

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Digitally signed by KIRAN KUMAR R Location: HIGH COURT OF KARNATAKA

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(BY SMT/MISS JENI PAUL, ADVOCATE FOR SRI. BADRI VISHAL., ADVOCATE)

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AND:

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M/S ESTELLO PROPERTIES A REGISTERED PARTNERSHIP FIRM HAVING OFFICE AT NO.37, 2^ND MAIN ROAD, C. BOMMASANDRA CROSS, G.K.V.K POST, YELAHNKA HOBLI, BANGALORE 560065. (REPRESENTED BY ITS PARTNERS, MR. N R SURESH MURTHY, MRS. LALITHA AND MR. D RAMANA KUMAR)

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MR. N R SURESH MURTHY AGED ABOUT 56 YEARS, S/O SRI B RAMAIAH, NO.37, 2^ND MAIN ROAD, C BOMMASANDRA CROSS, G.K.V.K. POST,

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YELAHANKA HOBLI, BANGALORE-560065.

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MRS. LALITHA AGED ABOUT 44 YEARS, W/O MR. N R SURESH MURTHY, NO.37, 2^ND MAIN ROAD, C BOMMASANDRA CROSS, G.K.V.K. POST, YELAHANKA HOBLI, BANGALORE 560065.

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MR. D RAMANA KUMAR AGED ABOUT 56 YEARS, S/O KOTESHWARA RAO, NO.37, 2^ND MAIN ROAD, C BOMMASANDRA CROSS, G.K.V.K. POST, YELHANKA HOBLI, BANGALORE 560065.

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…RESPONDENTS

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(BY SRI. MALLIKARJUN N.K., ADVOCATE FOR SRI. A. SAMPATH, ADVOCATE FOR R4 V/O DATED 21.03.2024 NOTICE TAKEN OUT TO R1 TO R3 BY WAY OF PAPER PUBLICATION IS H/S)

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THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO APPOINT AN ARBITRATOR TO ADJUDICATE THE DISPUTE BETWEEN THE PARTIES IN TERMS OF CLAUSE 26 OF THE JDA DATED 28/03/2009 AT ANNEXURE-A AND PASS SUCH OTHER ORDERS AS THIS HON’BLE COURT DEEMS 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 Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’) for the appointment of an arbitrator to resolve the disputes between the petitioner and respondents in terms of Clause (26) of the Joint Development Agreement dated 28.03.2009 vide Annexure-A.

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

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The respondents executed a Joint Development Agreement with the petitioner on 28.03.2009 for the development of the schedule property. Further, both parties entered into an Addendum / Sharing Agreement dated 06.04.2011 wherein the petitioner handed over 14 residential units to respondent No.4.

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The petitioner issued a notice to respondent No.4 on 06.09.2017, seeking certain amount towards Value

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Added Tax, service tax, maintenance charges, and BESCOM/BWSSB charges deposits as per the terms of the Joint Development Agreement along with aircondition and generator backup charges, which were not the part of the Joint Development Agreement.

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As there was no response from respondent No.4, the petitioner issued a notice on 16.05.2018 calling upon respondent No.4 to pay a sum of ₹1,47,26,390/-.

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Though the said notice was served on respondent No.4, he did not respond to the same. The petitioner also issued a final reminder on 31.05.2018. Respondent No.4 did not respond to the said final reminder.

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The petitioner issued an arbitration notice on 26.03.2022 invoking Clause (26) of the Joint Development Agreement dated 28.03.2009, seeking the appointment of an Arbitrator to resolve the

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dispute. The respondents did not reply to the said arbitration notice. Hence, this petition.

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Heard the learned counsel for the petitioner and the learned counsel for respondent No.4.

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Learned counsel appearing for the petitioner submits that, the dispute has arisen between the parties and there exists an arbitration clause in the Joint Development Agreement. The petitioner invoked the said arbitration clause by issuing the notice to the respondents. However, the respondents did not reply to the arbitration notice. Hence, he prays to allow the petition.

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Per contra , learned counsel appearing for respondent No.4 submits that the claim made by the petitioner is barred by limitation and also submitted that the petitioner’s claim which does not fall within the purview of the Joint Development Agreement. Accordingly, he prays to dispose of the petition.

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Perused the records and considered the submissions

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made by the learned counsel for the parties.

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The point that arises for consideration in this petition is as follows:

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“ Whether the petitioner has made out a ground to refer the matter to the sole arbitrator for adjudication of the disputes between the parties to the petition in terms of Clause (26) of the Joint Development Agreement dated 28.03.2009 and as per the provisions of the Arbitration and Conciliation Act, 1996 and Rules?”

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There is no dispute regarding the execution of the Joint Development Agreement on 28.03.2009 between the parties to the petition. The petitioner contended that the respondent committed a breach of terms of the Joint Development Agreement. The petitioner issued a legal notice calling upon the

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respondents to pay ₹1,47,26,390/- towards the maintenance charges etc.

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Despite the service of legal notices, the respondent did not respond to the legal notice issued by the petitioner. Therefore, the petitioner invoked the arbitration Clause under the Joint Development Agreement dated 28.03.2009 i.e., Clause (26). The said agreement provides for arbitration clause which reads as follows:

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“ 26) ARBITRATION :

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26.1)The Parties hereto agree that in the event of there being any disputes with regards to this Agreement or interpretation of any of the terms of this Agreement, the same shall be amicably resolved between them within 15 days of the aggrieved party bringing the breach/default to the notice of defaulting party, else, the same shall be referred to Arbitral proceedings as per prevailing Arbitration and Conciliation Act, 1996., and the proceedings shall be conducted as follows:

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a) All proceedings in any arbitration shall be conducted in English;

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b) The dispute shall be referred to a panel of two arbitrators dc.. Owner and Developer shall each appoint an Arbitrator and a third Arbitrator/Umpire shall be appointed by the two appointed arbitrators, with such information/documents to enable the Umpire/Arbitrators to conclude the entire proceedings within 45 calendar working days computed from date of referring it to the Umpire who shall pronounce a speaking award based upon the facts, representations and records furnished by the Parties to the dispute and the costs of their respective Arbitrator shall be borne by the respective parties and the cost of appointing the Umpire shall be borne equally by both the Owner and Developer;

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c) The arbitration award shall be final and binding on the parties hereto Le., not only the party present/made submissions but also the Party who has deliberately not submitted to the proceedings, which terms the parties hereto specifically understand and agree to be bound thereby to act accordingly;

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d) The arbitral tribunal may by unanimous agreement, award to a party that

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substantially prevails on the merits its costs and reasonable expenses (including reasonable fees of its Arbitrator/counsel);

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e) Seat of such arbitration tribunal shall be at Bangalore only;

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f) The Arbitration Proceedings shall be governed by the Arbitration and Conciliation Act, 1996;”

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From the perusal of the said arbitration clause, it is clear that in the event of there being any dispute regarding the agreement or the interpretation of any terms thereof, same shall be resolved amicably between them within 15 days of the aggrieved party bringing the breach or default to the notice of the defaulting party, or else, the dispute shall be referred to the arbitral proceedings under the provisions of the Act.

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Admittedly, the petitioner got issued a legal notice, alleging that the respondents have committed a breach of terms of the agreement and demanded a sum of ₹1,47,26,390/-. The respondents did not

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reply to the legal notice and also the arbitration notice issued under Section 21 of the Act. Thus, there is an arbitration clause in the Joint Development Agreement and the dispute has to be resolved through an arbitration.

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The learned counsel for respondent No.4 submitted that the claim made by the petitioner is barred by limitation.

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As far as the claim of the petitioner is concerned, whether the claim was a dead one; or a long-barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection falls under the jurisdiction of the Arbitrator. The scope of the judicial intervention is only restricted to situations where the court/judicial authority finds that the arbitration agreement does

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not exist or is null and void. The scope of examination is confined only to the existence of an arbitration agreement, as per the law laid down by the Hon'ble Apex Court in the case of M/s.Uttarakhand Purv Sainik Kalyan Nigam Limited Vs. Northern Coal Field Limited, reported in AIR 2020 SC 979 .

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The Hon'ble Supreme Court also examined about the issue of limitation and held that the limitation is a mixed question of fact and law, and the same involves the question of jurisdiction. The said issue is to be determined having regard to the facts and law, and hence, it is to be decided by the Arbitral Tribunal.

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As far as the limitation point is concerned, the respondents are at liberty to raise the same before the Arbitral Tribunal.

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In view of the above discussion, I am of the view

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that the petitioner has made out a ground to refer the dispute to the arbitration. Accordingly, I answer the point for consideration in affirmative and pass the following order:

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ORDER

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a. The Civil Miscellaneous petition is allowed .

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b. Hon’ble Mr. Justice Ajit J.Gunjal, former Judge, High Court of Karnataka, is nominated as the sole Arbitrator to resolve the disputes between the parties to the petition as per the terms of Arbitration and Conciliation Act and the Rules.

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