Dismissed¶55

Sri. Muniyappa v. Sri. Govindaraju

Arbitration and Conciliation Act, 1996 – S.37(1)(c) appeal against judgment dismissing S.34 objections – Agreement to sell dt.18.10.2013

Karnataka HC13 Jan 2025MFA/4953/2024

Download

Case brief

AI extract

What is this about?

Karnataka High Court (13.01.2025, V Kameswar Rao & S Rachaiaha JJ.), MFA No. 4953 of 2024: S.37(1)(c) Arbitration and Conciliation Act appeal against S.34 dismissal (AS No.46/2019) upholding arbitral award (AC No.188/2018) for refund of Rs.25 lakh advance under agreement to sell dt.18.10.2013 with 12% p.a. interest w.e.f 18.04.2014; 12% rate held justified, not on the higher side; appeal dismissed; IA No.1/2024 infructuous. Keywords: interest rate interference, refund of advance, agreement to sale, clause 5 double amount (arbitrator's finding).

What did the court decide?

None to the appellants; the appeal was dismissed and pending IA No.1/2024 was disposed of as infructuous. ¶55

Sri. Muniyappa Vs Sri. Govindaraju — Arbitration | Karnataka HC (2025)

¶1

1 - NC: 2025:KHC:1346-DB MFA No. 4953 of 2024

¶2

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶3

DATED THIS THE 13^TH DAY OF JANUARY, 2025

¶4

PRESENT

¶5

THE HON'BLE MR JUSTICE V KAMESWAR RAO

¶6

AND

¶7

THE HON'BLE MR JUSTICE S RACHAIAH

¶8

MISCELLANEOUS FIRST APPEAL NO. 4953 OF 2024 (AA)

¶9

BETWEEN:

¶10

SRI. MUNIYAPPA, S/O LATE ERABHOVI, AGED ABOUT 71 YEARS,

¶11

SRI. MUNIRAJU, S/O MUNIYAPPA, AGED ABOUT 39 YEARS,

¶12

Digitally signed by K G RENUKAMBA Location: High Court of Karnataka

¶13

BOTH ARE RESIDING AT BOMMENAHALLI VILLAGE, MANDOORU POST, BIDARAHALLI HOBLI, BENGALURU EAST TALUK, BENGALURU-560 049. …APPELLANTS (BY SRI. SADASHIVAIAH.K.G, ADVOCATE)

¶14

AND:

¶15

SRI. GOVINDARAJU, S/O LATE CHIKKAVEERAPPA, AGED ABOUT 45 YEARS, R/O MAKENAHALLI VILLAGE, NARASIPURA POST, SOMPURA HOBLI, NELAMANGALA TALUK, BENGALURU RURAL DISTRICT-562 111. …RESPONDENT (BY SRI. SACHIN.C, ADVOCATE)

¶16

2 - NC: 2025:KHC:1346-DB MFA No. 4953 of 2024

¶17

THIS MFA IS FILED U/S 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, 1996, AGAINST THE JUDGMENT DT.21.06.2024 PASSED IN A.S.NO.46/2019 ON THE FILE OF THE I ADDITIONAL DISTRICT AND SESSIONS JUDGE, BENGALURU RURAL DISTRICT, BENGALURU, DISMISSING THE PETITION FILED U/S.34 OF THE ARBITRATION AND CONCILIATION ACT, 1996.

¶18

THIS APPEAL COMING ON FOR ADMISSION THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

¶19

CORAM: HON'BLE MR JUSTICE V KAMESWAR RAO and HON'BLE MR JUSTICE S RACHAIAH

¶20

ORAL JUDGMENT

¶21

(PER: HON'BLE MR JUSTICE V KAMESWAR RAO)

¶22

The present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 has been filed with the following prayers:

¶23

“a. Set aside the impugned judgment and decree passed by the Learned I Additional District and Sessions Judge, Bengaluru Rural District, Bengaluru in AS No. 46/2019 dated 21.06.2024 and the arbitral award passed by the learned arbitrator in A.C. No. 188/2018 dated 05.07.2019 and consequently dismiss the claim of the respondent.

¶24

3 - NC: 2025:KHC:1346-DB MFA No. 4953 of 2024

¶25

b. Grant such other relief as this Hon'ble Court deems fit to grant under the circumstances of the case in the interest of justice and equity.”

¶26

From the above, it is noted that the appellant has challenged the order dated 21.06.2024 passed by the I Additional District and Sessions Judge, Bengaluru Rural District, Bengaluru (‘Additional District Judge’ for short) in AS No.46/2019 and also the arbitral award dated 05.07.2019 passed by the learned Arbitrator in AC No.188/2018, wherein the learned Arbitrator has allowed the claims of the respondent herein by stating as under:

¶27

“26. It is true as per the agreement particularly clause 5 the vendors have undertaken that if they failed to execute the sale deed even after the vendor/claimant came forward to pay the balance sale consideration they would refund the advance amount paid along with sequal sum ie. to say double the amount of advance received. But, in the instant case, as already held above the claimant has not offered to pay the balance amount of consideration nor he has called upon the respondents to make available the required documents or to get the survey conducted as agreed. Therefore, it has to be

¶28

¶29

NC: 2025:KHC:1346-DB MFA No. 4953 of 2024

¶30

stated that as the claimant failed to perform his part of the contract he is not entitled for return of double the amount as agreed under clause 5. However, as noticed above the respondents having received a sum of Rs.25 lakhs as advance sale consideration and having assured the claimant that they would make available the required documents and also get the survey of the lands conducted to secure hadbasth and identification well within the period of 6 months fixed for performance of the contract have failed to comply with their obligations. Therefore, they have rightly not issued any notice to the claimant notifying him that they were forfeiting the advance amount in terms of clause 5 of the agreement. In such circumstance the respondents are bound to return the advance amount along with interest so that they are not allowed to unjustly enrich themselves. Thus, while answering issue Nos.2 and 3 against the claimant it is held that the claimant is entitled for refund of the advance amount paid along with interest.

¶31

27. The material on record discloses that respondents have kept quite from 2014 onwards without informing the claimant about the suit instituted against them and the interim order of injunction granted in the said suit restraining them from alienating the lands in question. They were not justified in continuing to utilize the advance amount of Rs.25 lakhs received from the claimant when they were not in a position to execute the sale deed. Therefore, they are liable to pay interest on

¶32

5 - NC: 2025:KHC:1346-DB MFA No. 4953 of 2024

¶33

the said amount. Having regard to the nature of the transaction and the conduct of both the parties in not performing their part of the obligations under the agreement, I am of the view that the claimant has to be compensated by awarding interest @12% on the advance amount paid. The respondents are required to refund this advance amount along with 12% interest per annum from 18.4.2014 (after expiry of 6 months from the date of agreement dated 18.10.2013) till the date of payment along with costs of this proceedings. Hence, I pass the following:

¶34

AWARD

¶35

(i) The claim petition is partly allowed.

¶36

(ii) The claimant is held entitled only for refund of the advance amount of Rs.25 lakhs along with 12% interest per annum w.e.f 18.04.2014 till the date of payment along with costs of this proceedings from the respondents.

¶37

(iii) The Award is passed subject to payment of stamp duty under Article 11 of the Karnataka Stamp Act, 1957 and will have to be paid, initially, by the claimant and to be recovered from the Respondent, later.”

¶38

Learned Additional District Judge has, in a

¶39

challenge made by the appellants herein to the aforesaid award, has dismissed the same, by stating in paragraph No.22 as under:

¶40

6 - NC: 2025:KHC:1346-DB MFA No. 4953 of 2024

¶41

“22. Point No. 2 :- In view of the above discussion,

¶42

I proceed to pass the following:

¶43

ORDER

¶44

The arbitration suit filed by the plaintiffs under Section 34 of the Arbitration & Conciliation Act, 1996 is hereby dismissed.

¶45

Parties to bear their own cost. Office to draw decree accordingly.”

¶46

The only submission of the learned counsel for the appellants before us is, in respect of grant of interest at the rate of 12% p.a. on the amount of Rs.25,00,000/which was directed to be refunded to the respondent herein by the learned Arbitrator. In other words, learned counsel for the appellants has not challenged the award to the extent where the learned Arbitrator directed that the respondent-claimant before him is entitled to the refund of Rs.25,00,000/-. The interest which has been granted is 12% with effect from 18.04.2014 till the date of payment.

¶47

The submission is that, the grant of 12% interest is on the higher side.

¶48

7 - NC: 2025:KHC:1346-DB MFA No. 4953 of 2024

¶49

The submission is contested by the learned

¶50

counsel for the respondent by stating that, the grant of 12% interest is justified, though the respondent herein in the claim petition has sought interest at the rate of 24%. He states that, despite attachment order by the Executing Court, the appellants had sold part of the schedule property which shows malafide and under such circumstances, the grant of interest should not be interfered with.

¶51

We find that no challenge to the interest has been laid by the appellants before the learned Additional District Judge. No doubt the challenge was to the award per se which was rejected. In any case, the dispute between the parties is relatable to the agreement to sale dated 18.10.2013 by which the appellants have entered into an agreement of sale with the respondent herein to sell the properties, the grant of interest at 12% p.a. in the facts of this case is justified. We do not see any reason to accept

¶52