The Karnataka Urban Housing Co-Operative Society Ltd., Vs Hanumantharaya

¶1

NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶2

1 -

¶3

HC-KAR

¶4

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24^TH DAY OF JULY, 2025 BEFORE

¶5

THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR MISCELLANEOUS FIRST APPEAL NO.6720 OF 2016 (AA) C/W MISCELLANEOUS FIRST APPEAL NO.2962 OF 2016 (AA)

¶6

IN MFA NO. 6720 OF 2016: BETWEEN:

¶7

THE KARNATAKA URBAN HOUSING CO-OPERATIVE SOCIETY LTD., NO.352, 3^RD A CROSS, 2^ND STAGE, 3^RD PHASE, WEST OF CHORD ROAD, BENGALURU-79, REP. BY SECRETARY.

¶8

… APPELLANT

¶9

(BY SRI S.R.HEGDE HUDLAMANE, ADVOCATE)

¶10

AND:

¶11

HANUMANTHARAYA

¶12

Digitally signed by RAMYA D Location: HIGH COURT OF KARNATAKA

¶13

S/O LATE THIMMARAYAPPA, AGED ABOUT 76 YEARS, R/O: NO.4, 3^RD MAIN ROAD, 10^TH CROSS, AGRAHARADASARAHALLI, BENGALURU-560 079.

¶14

SURESH S/O LATE MAHESHWARAIAH, SINCE DECEASED BY HIS LR’S.,

¶15

SMT. MANGALA GOWRAMMA W/O LATE SURESH, AGED ABOUT 57 YEARS,

¶16

SRI. HARISH S/O LATE SURESH, AGED ABOUT 40 YEARS,

¶17

2 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶18

HC-KAR

¶19

USHA D/O LATE SURESH, AGED ABOUT 38 YEARS,

¶20

NAGARAJ

¶21

SINCE DECEASED BY HIS LR’S.,

¶22

SMT. VANAJA W/O LATE NAGARAJ, AGED ABOUT 57 YEARS,

¶23

SRI. KARTHIK S/O LATE NAGARAJ, AGED ABOUT 39 YEARS, REP. BY ITS GPA HOLDER NO.5 ABOVE.

¶24

KAVYA D/O LATE NAGARAJ, AGED ABOUT 57 YEARS,

¶25

CHENNEKESHAVA S/O LATE MAHESHWARAIAH, SINCE DECEASED BY HIS LR’S.,

¶26

SMT. SHANTHAMMA W/O LATE CHENNAKESHAV, AGED ABOUT 56 YEARS,

¶27

SRI. C. NAGARATHNA D/O LATE CHENNAKESHAVA, AGED ABOUT 29 YEARS,

¶28

SRI. C. JAYANTHI D/O LATE CHENNAKESHAVA, AGED ABOUT 27 YEARS,

¶29

RAVI S/O MAHESHWARAIAH, SINCE DECEASED BY HIS LR’S.,

¶30

SMT. SAROJA W/O LATE RAVI, AGED ABOUT 47 YEARS,

¶31

SUHAS S/O LATE RAVI, AGED ABOUT 22 YEARS,

¶32

JITHEEN S/O LATE RAVI, AGED ABOUT 20 YEARS,

¶33

3 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶34

HC-KAR

¶35

ALL THE RESPONDENTS NO.2 TO 13 ARE RESIDING AT NO.23, 4^TH MAIN ROAD, 10^TH CROSS, AGRAHARADASARAHALLI, BENGALURU-560 079.

¶36

SMT. LAKSHMAMMA W/O LATE T. CHANDRAPPA, AGED ABOUT 68 YEARS,

¶37

YATHISH S/O LATE CHANDRAPPA, AGED ABOUT 55 YEARS,

¶38

SRI. RAGAVENDRA S/O LATE T. CHANDRAPPA, AGED ABOUT 53 YEARS,

¶39

SRI. THIMMARAYAGOWDA @ MAHESH S/O LATE T. CHANDRAPPA, AGED ABOUT 40 YEARS,

¶40

RESPONDENT NOS.13 TO 17 ARE RESIDING AT NO.4, 3^RD MAIN ROAD, 10^TH CROSS, AGRAHARADASARAHALLI, BENGALURU-560 079.

¶41

THE ARBITRATOR, SRI. V.R. RAMASWAMY IYANAGAR, ADVOCATE, NO.209, RAJA SNOW BUILDING, S.C. ROAD, SESHADRIPURAM, BENGALURUR-560 020.

¶42

SMT. SHANTHAMMA WIDOW OF LATE KRISHNAPPA, AGED ABOUT 73 YEARS,

¶43

SRI. B.K. SRINIVASA S/O LATE KRISHNAPPA, AGED ABOUT 40 YEARS,

¶44

BOTH ARE R/O: GURUSWAMY NILAYA, NO.1025/13, 11^TH MAIN, HAMPI NAGARA, BENGALURU-560 104.

¶45

NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶46

4 -

¶47

HC-KAR

¶48

SMT. BHARATHI D/O LATE A. KRISHNAPPA, W/O SRI. VASUDEVA MURTHY, AGED ABOUT 46 YEARS, R/O: NO.1227/68, IST MAIN ROAD, MRCR EXTENSION, VIJAYANAGARA, BENGALURU-79.

¶49

SMT. SUMITHRA W/O DR. KEMPARAJ, AGED ABOUT 48 YEARS, R/O: NO.20, 515, ABW LAYOUT, 2^RD CROSS, HAL 3^RD STAGE, NEW THIPPASANDRA, BENGALURU-560 075.

¶50

… RESPONDENTS

¶51

(BY SRI. M.J. ALVA, ADVOCATE FOR R1-R9, R11, R14-R17 AND R10, R12, R13, R18 ARE SERVED; SRI. RAMESHA K.R., ADVOCATE FOR R19 TO R22)

¶52

THIS MFA IS FILED UNDER SECTION 37(1)(C) OF ARBITRATION AND CONCILIATION ACT, PRAYING TO SET ASIDE THE IMPUGNED JUDGMENT DATED 20.02.2016 PASSED IN A.C. NO.76/1999 ON THE FILE OF THE LEARNED LII ADDL. CITY CIVIL AND SESSIONS JUDGE, AT BENGALURU CITY (CCH53).

¶53

IN MFA NO.2962 OF 2016: BETWEEN:

¶54

HANUMANTHARAYA

¶55

S/O LATE THIMMARAYAPPA AGED ABOUT 67 YEARS, R/AT: NO.4, 3^RD MAIN ROAD, 10^TH CROSS, AGRAHARADASARAHALLI, BENGALURU-560 079.

¶56

SURESH S/O LATE MAHESHWARAIAH, SINCE DEAD BY HIS LR’S.,

¶57

2A. SMT. MANGALA GOWRAMMMA W/O LATE SURESH, AGED ABOUT 50 YEARS,

¶58

5 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶59

HC-KAR

¶60

2B. HARISH S/O LATE SURESH, AGED ABOUT 32 YEARS,

¶61

2C. USHA D/O LATE SURESH, AGED ABOUT 30 YEARS

¶62

NAGARAJ SINCE DEAD BY HIS LR’S.,

¶63

SMT. VANAJA W/O LATE NAGARAJ,

¶64

3A. AGED ABOUT 50 YEARS,

¶65

3B. KARTHIK S/O LATE NAGARAJ, AGED ABOUT 31 YEARS,

¶66

3C. KAVYA D/O LATE NAGARAJ, AGED ABOUT 28 YEARS

¶67

CHENNAKESHAVA S/O LATE MAHESHWARAIAH, SINCE DEAD BY HIS LR’S.,

¶68

4A. SMT. SHANTHAMMA W/O LATE CHENNAKESHAVA, AGED ABOUT 39 YEARS,

¶69

4B. C. NAGARATHNA D/O LATE CHENNAKESHAVA, AGED ABOUT 20 YEARS,

¶70

4C. C. JAYANTHI D/O LATE CHENNAKESHAVA, AGED ABOUT 18 YEARS,

¶71

APPELLANTS NO.4(B) AND (C) ARE MINORS AND THEY REPRESENTED BY THEIR MOTHER GUARDIAN APPELLANT NO.4(A).

¶72

RAVI S/O MAHESHWARAIAH, SINCE DEAD BY HIS LR’S.,

¶73

5A. SMT. SAROJA W/O LATE RAVI, AGED ABOUT 35 YEARS,

¶74

6 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶75

HC-KAR

¶76

5B. SUHAS S/O LATE RAVI, AGED ABOUT 15 YEARS,

¶77

5C. JITHEEN S/O LATE RAVI, AGED ABOUT 12 YEARS,

¶78

APPELLANTS NO.5(B) AND (C) ARE MINORS AND THEY REPRESENTED BY THEIR MOTHER AND NATURAL GUARDIAN APPELLANT NO.5(A). ALL THE APPELLANTS NO.2(A) TO 5(C) ARE RESIDING AT NO.23, 4^TH MAIN ROAD, 10^TH CROSS, AGRAHARADASARAHALLI, BENGALURU-560 079.

¶79

SMT. LAKSHMAMMA W/O LATE T. CHANDRAPPA, AGED ABOUT 58 YEARS,

¶80

YATHISH S/O LATE CHANDRAPPA, AGED ABOUT 38 YEARS,

¶81

RAGAVENDRA S/O LATE CHANDRAPPA, AGED ABOUT 36 YEARS,

¶82

THIMMARAYAGOWDA @ MAHESH S/O LATE CHANDRAPPA, AGED ABOUT 34 YEARS,

¶83

APPELLANT NOS. 6 TO 9 ARE R/A: NO.4, 3^RD MAIN ROAD, 10^TH CROSS, AGRAHARADASARAHALLI, BENGALURU-560 079.

¶84

... APPELLANTS

¶85

(BY SRI. M.J. ALVA, ADVOCATE)

¶86

AND:

¶87

KRISHNAPPA SINCE DEAD BY HIS LR’S.,

¶88

1A. SMT. SHANTHAMMA W/O LATE A. KRISHNAPPA,

¶89

7 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶90

HC-KAR

¶91

AGED ABOUT 71 YEARS, NO.1025/13, 'GURUSWAMY NIVASA' 11^TH MAIN, HAMPINAGARA, BENGALURU-560 104.

¶92

1B. B.K. SRINIVASA

¶93

S/O LATE A. KRISHNAPPA, AGED ABOUT 40 YEARS, NO.1025/13, 'GURUSWAMY NIVASA' 11^TH MAIN, HAMPINAGARA, BENGALURU-560 104.

¶94

1C. SUMITHRA

¶95

D/O LATE A. KRISHNAPPA, W/O DR. KEMPARAJ, AGED ABOUT 48 YEARS NO.20, 515, ABW LAYOUT, 2^ND CROSS, HAL 3^RD STAGE, NEW THIPPASANDRA, BENGALURU-560 075.

¶96

1D. SMT. BHARATHI

¶97

D/O LATE A. KRISHNAPPA W/O MR. VASUDEVA MURTHY, AGED ABOUT 46 YEARS, NO.1227/68, 1^ST MAIN ROAD, MRCR EXTENSION, VIJAYANAGAR, BENGALURU-560 040.

¶98

2. THE ARBITRATOR

¶99

SRI. V.R. RAMASWAMY IYANGAR, ADVOCATE, NO.209, RAJA SNOW BUILDING, S.C. ROAD, SESHADRIPURA, BENGALURU-560 020.

¶100

… RESPONDENTS (BY SRI. RAMESHA K.R., ADVOCATE FOR PROPOSED R1(A-D); R2-SERVED)

¶101

THIS MFA IS FILED UNDER SECTION 37(1)(B) OF ARBITRATION AND CONCILIATION ACT, PRAYING TO SET ASIDE THE IMPUGNED JUDGMENT DATED 20.02.2016 PASSED IN A.C. NO.76/1999 ON THE FILE OF THE LEARNED LII ADDL.

¶102

8 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶103

HC-KAR

¶104

CITY CIVIL AND SESSIONS JUDGE, AT BENGALURU CITY (CCH53) AND REVERSE THE FINDINGS BY SETTING ASIDE THE AWARD DATED 08.02.1999 PASSED IN AC NO.76/1999 BY THE LEARNED ARBITRATOR/RESPONDENT NO.2 AND DECREE THE SUIT FILED BY THE APPELLANTS ON THE FILE OF THE LII ADDL. CITY CIVIL AND SESSIONS JUDGE, AT BENGALURU CITY (CCH-53).

¶105

THESE APPEALS ARE HAVING BEEN HEARD AND RESERVED FOR JUDGMENT AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, JUDGMENT IS DELIVERED THEREIN AS UNDER:

¶106

CORAM: HON'BLE MR JUSTICE HANCHATE SANJEEVKUMAR

¶107

CAV JUDGMENT

¶108

MFA No.6720/2016 is filed by the Karnataka Urban Housing Co-Operative Society Ltd., and MFA No.2962/2016 is filed by the owner of land challenging the order dated 20.02.2016 passed in A.C.No.76/1999 on the file of LII Additional City Civil and Sessions Judge, Bengaluru City (CCH-53)¹ , thereby, the Arbitration Suit filed under Section 34 of the Arbitration and Conciliation Act, 1996² is dismissed.

¶109

1 (hereinafter referred to as ‘the City Civil Court’ for short)

¶110

2 (hereinafter referred to as ‘the Act, 1996’ for short)

¶111

9 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶112

HC-KAR

¶113

For the sake of convenience and easy

¶114

reference, the parties are referred to as per their rankings before the Arbitration suit.

¶115

Brief facts of the cases are:

¶116

It is stated that the plaintiffs are the absolute

¶117

owners and in possession of the non-agricultural land bearing Sy.No.69/2-A measuring 2 acres 20 guntas, situated at Agradasarahalli, Yeshwanthapura Hobli, Bangalore. One Thimmarayappa, who is the father of plaintiff No.1, grandfather of plaintiff Nos.2 to 5, 7 to 9 and father-in-law of plaintiff No.6 had purchased the land bearing Sy.No.69/2, measuring 4 acres 26 guntas from one Annayappa through registered sale deed dated 22.10.1953. During his lifetime, he has sold 16 guntas of land and the remaining land was 3 acre 10 guntas. He died on 21.04.1984 leaving behind three sons namely Maheswaraiah, T Hanumantharaya and T Chandrappa. Maheswaraiah died leaving behind his sons, plaintiff Nos.2 to 5 namely Hanumantharaya (plaintiff No.1) and T

¶118

10 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶119

HC-KAR

¶120

Chandrappa. Plaintiff No.6 is the wife of late T Chandrappa. Thus, all the plaintiffs are owners and having right, title and interest over the suit schedule properties. During the lifetime of Thimmarayappa, Maheswaraiah and Chandrappa executed a registered Power of Attorney in favour of A.K.Gururao on 07.02.1972 to look after the affairs of schedule property.

¶121

On the basis of the said GPA, A.K.Gururao has made certain transactions with the third parties. He expired. In the meanwhile the then City Improvement Trust Board (CITB for short) now Bengaluru Development Authority (BDA for short) has acquired the said land for formation of house sites. The plaintiffs predecessor after coming to know about the same, attempted to take suitable action for getting release of the property from the acquisition. At that point of time, defendant No.1 came forward and approached the plaintiffs’ predecessor and promised that he will look after the affairs of the aforesaid land and he would also take steps to get release the

¶122

11 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶123

HC-KAR

¶124

property from the acquisition. The plaintiffs’ predecessor and plaintiff No.1 having reposed confidence in defendant No.1 had executed a GPA in his favour for release of the property and it was agreed that whatever the expenditure incurring by defendant No.1 will be repaid to defendant No.1 by the plaintiffs’ predecessor with minimum interest. Thereafter, defendant No.1 obtained the signature of the plaintiffs’ predecessor on various blank stamps papers, blank printed forms, blank vakalathnamas and other various papers stating that as they are required for him to move before the BDA and Government for release of the suit schedule land.

¶125

Since the plaintiffs’ predecessor and the plaintiffs are illiterates without knowing the consequences of signing on the said papers having reposed confidence on defendant No.1 have signed the papers. But defendant No.1 has misused the signed papers by taking undue advantage of innocence and illiteracy of the plaintiffs and plaintiffs’ predecessors in order to get and unlawful gain

¶126

12 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶127

HC-KAR

¶128

and to knock of the property in question has converted the said signed papers for his own benefit and created an agreement of sale and other valuable documents and also vakalathnama and other documents are utilized for the purpose engaging the advocate in the proceedings instituted by him and obtained orders from the courts in his favour.

¶129

The plaintiffs were not aware of the proceedings

¶130

initiated by defendant No.1. Also, the plaintiffs had no awareness regarding Civil Misc. Petition No.16/1998 filed before the High Court and other proceedings even they have not engaged an advocate at any point of time. Defendant No.1 by mis-utilizing the signed vakalathnama, he himself engaged the advocate, who has acted as per the instructions of defendant No.1 and obtained orders from various courts, which were not brought to the knowledge of the plaintiffs. Therefore, it is alleged that defendant No.1 has played fraud and has obtained illegal orders.

¶131

13 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶132

HC-KAR

¶133

It is also stated that the plaintiffs were not

¶134

aware of B.Ramaswamy Iyangar and they have not proposed his name as an Arbitrator before the High Court or in the legal reply notice and conducting the case and have not appeared before defendant No.2/Arbitrator and nor led the evidence. Defendant No.1 has falsely stated that he has approached the plaintiffs in the year 1998 and informed them that he has already taken steps for releasing the property and some of the signatures are required in that regard and insisted them to sign on papers, but defendant No.1 by playing fraud obtained signatures of the plaintiffs. The plaintiffs knew the fraud played by defendant No.1 and they came to know when Execution Petition No.568/1999 was filed and immediately they approached their advocate and came to know that defendant No.1 had played fraud in obtaining an award from the Arbitrator.

¶135

It is further pleaded that A.K.Gururao on the

¶136

basis of General Power of Attorney (for short ‘GPA’),

¶137

14 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶138

HC-KAR

¶139

entered into an agreement of sale on 07.02.1972 agreeing

¶140

to sell 3 acre 10 guntas in Sy.No.69/2 in favour of Karnataka Urban Housing Co-operative Societies, Bangalore. After the death of A.K.Gururao, the plaintiffs’ predecessors and plaintiff No.1 have renewed the agreement of sale executed by him, on 28.01.1976. Pursuant to the said agreement of sale, the society has converted the agricultural land to non-agricultural land for formation of house sites and to allot the same to its members and filed number of cases for releasing the said property from BDA. In the year 1998, the Government released the property from acquisition to an extent of 2 acres 10 guntas. After denotifying the said land, the Society got issued notices to the plaintiffs for completing the sale transaction. Defendant No.1 on the basis of the created documents has renewed the agreement of sale dated 28.01.1976 on 10.03.1999, thereafter the Society has filed suit in O.S.No.4354/1999 and the plaintiffs have entered into compromise with Society and said suit was

¶141

15 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶142

HC-KAR

¶143

decreed in accordance with the compromise petition. As such, defendant No.1 has no manner of right, title or interest over the schedule property and he is not entitled to get the award on the basis of the documents created by him. Hence, the impugned award passed by the learned Arbitrator is not sustainable.

¶144

Being aggrieved by the award passed by the learned Arbitrator, the Arbitration suit is preferred under Section 34 of the Act, 1996 by raising various grounds that the agreement of sale dated 18.05.1981 and subsequent agreement of sale dated 10.08.1996 are created and concocted one. There was no arbitration agreement. However, subsequently arbitration clause was inserted without knowledge of the plaintiffs. There were no signatures of the plaintiffs or their predecessors. Therefore, there was no arbitration clause to appoint Arbitrator and the plaintiffs were unaware of appointment of arbitrators and his proceedings, therefore, award passed by defendant No.2 is illegal. The Arbitrator has not

¶145

16 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶146

HC-KAR

¶147

followed the principle of natural justice and award passed by the Arbitrator is opposed to public policy. The Arbitration award passed is by playing fraud, but the award passed dated 08.02.1999 has not been communicated to the plaintiffs.

¶148

Further the plaintiffs came to know about passing of such award on 13.06.1999, when notice in Execution Petition No.568/1999 was served on plaintiff Nos.1 and 8; therefore, the plaintiffs were unaware about the award passed. Hence, there is no question that the suit filed is barred by limitation.

¶149

Defendant No.1 appeared through his counsel

¶150

and filed written statement. Defendant No.2 is the Arbitrator and has remained absent. Defendant No.1 denied the material contents and all the averments made in the plaint. It is pleading of the plaintiffs that they have entered into agreement of sale of schedule property. The appointment and conduct of arbitral proceedings are all in accordance with law and there is no illegality committed,

¶151

17 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶152

HC-KAR

¶153

nor defendant No.1 has committed any fraud. Defendant No.2 by conducting arbitral proceedings as per law had passed enforceable arbitration award with due process of law and it is binding upon the plaintiffs, therefore, Execution petition was filed. Thus, the suit filed by the plaintiffs is barred by limitation.

¶154

Based on the pleadings, the City Civil Court has

¶155

framed the following points for consideration:

¶156

1. Whether the plaintiffs prove any of the grounds mentioned under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the award passed by the learned Arbitrator on 08.02.1999?

¶157

2. Whether the plaintiffs prove that the sale deed dated 25.08.1999 got executed by defendant No.1 through the process of court in E.P.No.568/1999, is null and void?

¶158

3. Whether the plaintiffs are entitled for the reliefs and prayed for?

¶159

4. What Order?

¶160

18 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶161

HC-KAR

¶162

The City Civil Court held that the plaintiffs have not made any sufficient grounds to set aside the award as per Section 34 of the Act, 1996. Further held that the plaintiffs have failed to prove that the sale deed dated 25.08.1999 got executed by defendant No.1 is void, therefore, the process of Court in Arbitration Proceedings No.568/1999 is null and void. The City Civil Court has assigned reasons that as per parameters enumerated in Section 34 of the Act, 1996 the award cannot be set aside as there is no ground available to set aside the same. Also the suit filed is barred by limitation. The City Civil Court held that there was clause for referring the matter to Arbitrator in case of dispute arises and the agreement is binding on both the parties. Hence, formed opinion that award cannot be set aside.

¶163

The City Civil Court has opined that an order of High Court appointment of arbitrator in Civil Miscellaneous case No.16/1998 is binding on by the parties to be arbitral proceedings. Further, the plaintiffs have not raised

¶164

19 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶165

HC-KAR

¶166

objection regarding lack of jurisdiction of arbitral Tribunal as per Section 16(2) of the Act. Further, the Trial Court held that defendant No.1 had not played fraud and also the Arbitrator has conducted proceedings by following principle of natural justice and therefore, no grounds available for setting aside the arbitral award. Therefore, dismissed the suit.

¶167

Being aggrieved by the dismissal of arbitration suit, the plaintiffs, who are owner of the property and subsequent vendor of the property, viz., Society has preferred the appeals by raising various grounds.

¶168

Learned counsel for appellants/plaintiffs in consonance with the grounds raised in the memorandum of appeal have submitted that the City Civil Court has failed to appreciate that both defendant Nos.1 and 2 have colluded each other and it is well designed proceedings just to help defendant No.1. Though fraud is demonstrated through production of certified copies of the proceedings in A.C.No.20/1999 filed by defendant No.1 before the

¶169

20 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶170

HC-KAR

¶171

Arbitrator, which is filed by him on 26.03.1999, an affidavit was also filed in support of the application asserting that arbitral award had not been passed as on that day, but surprisingly a memo was filed by the counsel for respondent No.1 on 29.07.1999 asserting that the award had already been passed by the learned Arbitrator on 08.02.1999 itself i.e., on 1½ month earlier to the filing of the Arbitration suit. Defendant No.1 had produced the order sheet of the arbitral proceedings till 25.03.1999 which shows that no award has been passed, but all of a sudden a predated award is created by the learned Arbitrator in collusion with defendant No.1. Therefore, mischief is played just to keep the plaintiffs in dark.

¶172

Further submitted that the relief sought in the suit is to set aside the award dated 08.02.1999 on the ground of fraud played and fraud is well established by producing certified copy of the proceedings in A.C.No.20/1999 filed by defendant No.1, but the City Civil Court has not considered the same. Hence, the award

¶173

21 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶174

HC-KAR

¶175

passed is by playing fraud and dismissal of suit is illegal and its findings are perverse in nature.

¶176

Further, argued that in spite of specific direction to defendant No.2, he has not produced records of the arbitral proceedings. The learned Arbitrator/respondent No.2 has filed a memo to the effect that he has produced all the documents before this Court in Civil Miscellaneous Petition No.16/1998 on 08.04.1999. The scope of proceedings under Section 11(6) of the Act, 1996 is limited and there is no necessity of calling for records therefore, defendant No.2-Arbitrator has falsely stated that the records were sent to this Court in the above said CMP proceedings.

¶177

Though sufficient materials were produced before the City Civil Court that defendant No.2 and defendant No.1 have played fraud just to achieve unlawful gain by defendant No.2, but the City Civil Court has not appreciated the same. Hence, the order passed by the City Civil Court in dismissing the suit is perverse and illegal.

¶178

22 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶179

HC-KAR

¶180

The City Civil Court has wrongly formed opinion that there was clause of arbitration in the agreement, but actually it is not found in the agreement. Therefore, the City Civil Court has not considered the case in true and correct perspective manner. Hence, prays to allow the appeal and set aside the award passed by defendant No.2-Arbitrator and the order passed by the City Civil Court.

¶181

In appeal in MFA No.6720/2016, the

¶182

appellant/Karnataka Housing Co-operative Society Ltd., has raised grounds that initiation of arbitral proceedings is without jurisdiction as there is no such clause in the agreement for referring the dispute to the learned Arbitrator. Further urged that the General Power of Attorney and the original agreement were already handed over to the society and on the joint efforts of owners appellant/society and subsequently the appellant/society is directed to pay conversion fine by the CITB which has been paid by the society, layout was formed and is approved by the BDA as per resolution No.741 and all

¶183

23 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶184

HC-KAR

¶185

these things have been happened during the lifetime of Thimmarayappa and after his death, legal heirs of Thimmarayappa namely respondent Nos.1 to 9 could not execute an agreement of sale in favour of respondent No.10 as they have no right, title, interest and possession over the same.

¶186

Neither, the Arbitrator nor the District Court have examined the documents are created documents just to deprive the rights of owner and the appellant/society. There was fraud played by referring the case to the arbitration as there is no clause of arbitration and therefore, the entire arbitral proceedings is behind back of the owner and appellants. The City Civil Court without calling for records and without seeing the records has erroneously passed the order confirming the award passed by the learned Arbitrator.

¶187

When the City Civil Court had called for records of arbitration, but respondent No.2/Arbitrator had filed a memo to the effect that the records were produced in CMP

¶188

24 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶189

HC-KAR

¶190

No.16/1998. However, the scope of proceedings under Section 11(6) of the Act, 1996 is limited, restricted and confined to the extent of appointment of the learned Arbitrator and the award passed by the learned Arbitrator will be subject to jurisdiction of the competent authorities.

¶191

Therefore, there is no occasion by the High Court to call for arbitration records. Therefore, in this regard to hide out the truth involved in the case the learned Arbitrator had filed false affidavit before the City Civil Court by saying that the records were forwarded to the High Court and this is erroneously appreciated by the City Civil Court. Therefore, fraud vitiates all solemn acts, which is not considered by the City Civil Court. The Trial Court has wrongly came to conclusion that there was clause of arbitration in the agreement, but in fact it was fraud played referring the case to Arbitrator and the Arbitrator is

¶192

tailor made as per whims of respondent No.1 and therefore, both defendants were in collusion just to knock of the property, which is revealed in the case, but the Trial

¶193

25 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶194

HC-KAR

¶195

Court has failed to appreciate all these things. Hence, resulting into passing of erroneous order.

¶196

Learned counsel for the appellant/owner as well as the Karnataka Housing Co-operative Society have submitted that there was no clause in the agreement for referring the matter to the Arbitrator, but it was wrongly referred to the Arbitrator. Furthermore, the Arbitrator has played fraud and it could be seen apparently on the face of the record that on the date of award virtually there is no award, but subsequently the award is created just to suit the respondent No.1. Further submitted that the learned Arbitrator cannot pass award pertaining to specific performance of agreement, which the City Civil Court alone has jurisdiction. Therefore, award of the learned Arbitrator itself is compelling the appellant/owner to sell the land to respondent No.1 at thrown away price. Therefore, the award passed by the learned Arbitrator is without jurisdiction and by playing fraud. The City Civil Court in toto while acting under Section 34 of the Act,

¶197

26 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶198

HC-KAR

¶199

1996 has failed to appreciate these things though demonstrated before it. The learned District Judge had not seen the records, but only on the basis of agreement of sale has passed awards. Therefore, the order passed by the City Civil Court as well as the award are liable to be set aside. Hence, prays to allow the appeal.

¶200

The respondents’ counsel remained absent in spite of giving sufficient opportunities.

¶201

Upon hearing both the learned counsel

¶202

appearing for the parties and perusal of the records, the following points that would arise for consideration:

¶203

i) Whether, under the facts and circumstances involved in the case, the appellants make out sufficient grounds to make interference with the award passed by the learned Arbitrator as per Section 34 of the Arbitration and Conciliation Act, 1996 and the order passed by the District Court is perverse?

¶204

ii) Whether, under the facts and circumstances involved in the case, the award passed by the learned Arbitrator and the order passed by

¶205

27 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶206

HC-KAR

¶207

the City Civil Court requires interference by this Court?

¶208

Upon considering the chronological events,

¶209

respondent No.1 has created agreement of sale in his favour on 18.05.1981 in respect of lands of the appellants measuring 02 acre 20 guntas in Sy.No.69/2A of Agradasarahalli village, Yahsvanthapura Hobli, Bengaluru North taluk. The said land was subject matter for acquisition by the BDA and therefore the appellants were on the verge of losing the land; hence, they have requested respondent No.1 to exclude the land from acquisition proceedings by the BDA. Another agreement was formed by respondent No.1 on 10.08.1996, but fraudulently converted the same as an agreement of sale in respect of the property by making corrections, interpolations and writing on the agreement, which can be seen. Since there was dispute arose, respondent No.1 filed

¶210

a Civil Miscellaneous Petition in CMP No.16/1998 under Section 11(6) of the Act and it was allowed appointing

¶211

28 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶212

HC-KAR

¶213

respondent No.2 as sole Arbitrator for resolving the dispute of specific performance.

¶214

It is the contention of the appellants that the appellants have not at all executed any agreement of sale in favour of respondent No.1, but respondent No.1 has fraudulently created a clause for specific performance. When this being the dispute that arose between the appellant and respondent No.1, such CMP was filed on 29.05.1998. Respondent No.1 filed A.C.No.20/1999 before the City Civil Court under Section 9 of the Act against the appellants seeking relief of injunction from alienating or encumbering the property.

¶215

When this being the fact, the

¶216

appellants/society was not party in the arbitration proceedings. The society is the holder of an agreement of sale from the appellants/plaintiffs, who are the owners but this society was not made a party in the arbitration proceedings. Therefore, the award passed by respondent

¶217

29 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶218

HC-KAR

¶219

No.2/Arbitrator whatever it may be, is beyond the knowledge of the appellant/Housing Society.

¶220

On 29.07.1999, respondent No.1 being petitioner in A.C.No.20/1999 filed a memo stating that on 08.02.1999 award was passed and it has been enforced in execution case No.5779/1999 before the City Civil Court. Therefore, submitted that the above said petition does not survive for consideration and hence requested A.C.No.20/1999 may be dismissed as not pressed.

¶221

However, respondent No.1 in A.C.No.20/1999 has filed petition under Section 9 of the Act, 1996 along with an affidavit on 26.03.1999 stating that respondent No.2 was appointed as an Arbitrator and heard the entire dispute and recorded the evidence of the parties and reserved the matter to pass an arbitration award in respect of the schedule lands. It is specifically stated that the decision is yet to be pronounced; this part of statement can be seen in paragraph No.2 in the affidavit filed on 26.03.1999.

¶222

30 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶223

HC-KAR

¶224

Further, the learned Arbitrator at paragraph

¶225

No.3 has deposed in the sole affidavit that the Arbitrator has not completed proceedings in the arbitration and that 30 days are required to be given and the respondents have to take time to file objections to the proceedings or comply with the arbitration proceedings. Therefore, as per this statement of respondent No.1 as on 26.03.1999 till that day respondent No.2 has not pronounced the award in the arbitration proceedings, but in the memo filed on 29.07.1999, it is stated that on 08.02.1999 the learned Arbitrator had passed an award; therefore, this is nothing but proof of collusion between respondent Nos.1 and 2 in getting an award by whatever means. Also, respondent No.1 has not furnished a correct execution petition number, which is numbered as E.P.No.568/1999, but wrongly stated number as E.P.No.5779/1999 just to mislead the appellants so as to make that the appellants not to appear in execution case. Therefore, the appellants have filed A.C.No.76/1999 before the City Civil Court,

¶226

31 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶227

HC-KAR

¶228

Bengaluru by making the Arbitrator as party as per Rule 4 (c) of High Court of Karnataka Arbitration (Proceedings before Courts) Rules, 2001 with allegation that both respondent Nos.1 and 2 have played fraud in collusion with each other.

¶229

Before the City Civil Court in A.C.No.76/1999, the Court has called for entire records pertaining to the arbitral proceedings, but respondent No.2 filed a memo stating that he had produced the arbitration documents in CMP No.16/1998 on 08.04.1999. However, upon considering the CMP proceedings in CMP No.16/1998 there was no occasion for the High Court to call for records and arbitration proceedings because the scope under Section 11(6) of the Act is very limited for the purpose of appointing the Arbitrator. The High Court in a Civil Miscellaneous Petition under Section 11(6) of the Act had no occasion to call for the records, but only appoint the Arbitrator. All these eventualities with chronological dates proved the fact that the conduct of proceedings by

¶230

32 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶231

HC-KAR

¶232

respondent No.2 is nothing but fraud played. This factual aspect found on the records was not at all correctly appreciated by the City Civil Court while exercising power under Section 34 of the Act, 1996. Though the award could be challenged under Section 34 of the Act with limited scope and jurisdiction as per the conditions applied therein, fraud vitiates all things and the entire proceedings have become void ab-initio . This fact emerged from the records was not appreciated by the City Civil Court correctly resulting into passing of erroneous order dismissing the arbitration suit.

¶233

As could be seen from the records, the whole exercise of arbitral proceedings by appointing respondent No.2 as Arbitrator is nothing but just to knock off the property on the guise of specific performance of contract. It is the case of the appellants that an agreement of sale was not executed, but respondent No.1 has created that document and arbitral proceedings were initiated to claim relief of specific performance. An award is passed for

¶234

33 - NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶235

HC-KAR

¶236

specific performance of the contract directing the appellants to sell the lands by receiving balance sale consideration amount. Whether this could be done by the Arbitrator is the question to be considered. The grant of relief of specific performance is complete domain of City Civil Court under Section 20 of the Specific Relief Act, but respondent No.2 being an Arbitrator has passed an award of specific performance of contract. Therefore, considering the entire chronological events as discussed above, the arbitral proceedings are nothing but collusive in nature between respondent Nos.1 and 2 and by playing fraud for illegal gain. These factors were lost sight by the City Civil Court resulting into passing of erroneous order in dismissing the suit. Accordingly, I answer point Nos.(i) and (ii) in the affirmative. Hence, the appeals are liable to be allowed.

¶237

In the result, I proceed to pass the following:

¶238

34 -

¶239

NC: 2025:KHC:28318 MFA No. 6720 of 2016 C/W MFA No. 2962 of 2016

¶240

HC-KAR

¶241

ORDER

¶242

i. Appeals in MFA Nos.2962 and 6720 of 2016 are allowed .

¶243

ii. The order dated 20.02.2016 passed in A.C.No.76/1999 on the file of LII Additional City Civil and Sessions Judge, Bengaluru City (CCH-53), and also award dated 08.02.1999 passed by respondent No.2/Arbitrator are set aside.

¶244

iii. Registry is directed to send back the Trial Court Records along with a copy of this judgment.

¶245

iv. No order as to costs.

¶246

In view of disposal of the appeals, pending applications, if any, shall stand disposed of.

¶247

SD/(HANCHATE SANJEEVKUMAR) JUDGE

¶248

SRA CT:BCK LIST NO.: 19 SL NO.: 1

The Karnataka Urban Housing Co-Operative Society Ltd., v. Hanumantharaya

Case brief

What is this about?

What did the court decide?

The Karnataka Urban Housing Co-Operative Society Ltd., v. Hanumantharaya

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

Similar cases

Shri.Marilingappa Basavanneppa Adarakatti Vs Shri.Andappa S/O Basavanneppa Adarakatti

Shri P Naresh Babu S/O Radhakrishna Murthy Vs T Srimannnarayan S/O T Ammeshwar Rao

Shri. Devendra Basappa Gandh Vs Smt. Shamala Chandrashekhar Pattanashetti

Najeema Banu W/O Javeed Ahammad Mattikoti Vs Divisional Controller

The Divisional Manager Vs Bijan Kauram Owary

The Divisional Manager Vs Gangavva W/O Ulakappa Garjarajakkanavar @