Satchmo Holdings Limited Vs B Abhayraj Shetty

SATCHMO HOLDINGS LIMITED (FORMERLY NEL HOLDINGS SOUTH LIMITED) A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956. HAVING ITS REGISTERED OFFICE AT NO. 110, ANDREWS BUILDING, LEVEL 1, MG ROAD, BENGALURU-560 001. THROUGH ITS AUTHORISED REPRESENTATIVE MS. VASUMATI H.K.

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…PETITIONER

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(BY MISS. KRUTIKA RAGHAVAN.,ADVOCATE)

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AND:

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

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B ABHAYRAJ SHETTY AGED ABOUT 54 YEARS, S/O LATE B RAMANATH R/AT NO.24, MN KRISHNA ROAD, BASAVANAGUDI, BENGALURU-560 004.

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BHARATHI SHETTY, AGED ABOUT 53 YEARS, D/O LATE B RAMANATH R/AT FLAT NO. 301, SALAPURIA ARISTOCRACY, NO. 76, 14^TH CROSS, JP NAGAR 1^ST PHASE,

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HC-KAR

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BENGALURU- 560 004.

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GURU AND JANA, CHARTERED ACCOUNTANTS, HAVING OFFICE AT NO.41, PATALAMMA TEMPLE STREET, BASAVANGUDI, BENGALURU-560004. REPRESENTED BY ITS MANAGING PARTNER, MR. GURU PRASAD MAKAM.

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…RESPONDENTS

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(BY SRI. RAVINDRA PRASAD B.,ADVOCATE FOR R1, R2 & R3 (VK NOT FILED IN R/O R3))

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THIS CMP IS FILED UNDER SECTION 11(5) OF ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO APPOINT AN ARBITRAL TRIBUNAL TO ADJUDICATE AND RESOLVE THE DISPUTES THAT HAVE ARISEN UNDER SETTLEMENT AGREEMENT DATED 28.10.2020 (ANNEXURE F) PAGE NO. 171 CLAUSE 17 AND ESCROW AGREEMENT DATED 16.02.2022 (ANNEXURE J) CLAUSE 6.7 BETWEEN THE PETITIONER AND RESPONDENTS BY EXERCISING JURISDICTION AND POWER UNDER SEC. 11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996.

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THIS PETITION, COMING ON FOR ADMISSION, THIS DAY,

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ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE ASHOK S.KINAGI

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HC-KAR

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ORAL ORDER

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This civil miscellaneous petition is filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’) seeking an appointment of the Arbitrator to resolve the dispute between the parties to the petition in terms of clause 17 of the Escrow Agreement dated 16.02.2022, as per the provisions of the Act and the Rules.

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

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2.1. On 17.06.2029, respondent Nos.1 and 2, along

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with their father, Late B.Ramnath Shetty, executed the JDA and GPA with the petitioner for the development of the schedule property into a residents commercial complex. After the death of Ramnath Shetty on 03.10.2020, the property devolved upon respondent Nos.1 and 2 in pursuance of the Will dated 09.03.2020. The

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parties entered into a settlement agreement dated 28.10.2020. The petitioner executed deeds of cancellation

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HC-KAR

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of the JDA and GPA under the bona fide belief that respondent Nos.1 and 2 would discharge their obligations under the settlement agreement. Further, respondent No.3 came to be appointed as the Escrow agent vide escrow agreement. On 07.03.2022, respondent Nos.1 and 2 issued a consent letter, affirming the arrangement arrived at between the parties and Escrow Agent. Respondent Nos.1 and 2 withdrew the proceedings before the NCDRC and paid Rs.50 Lakhs to the petitioner. Respondent Nos.1 and 2 also executed an affidavit for withdrawal of WP No. 2272 – 2275 of 2018. Petitioner issued various communications to respondent Nos.1 and 2 to come forward to finally get the proceedings allowed in WP 2272 - 2275 of 2018. Further, the petitioner filed a suit in OS No. 1642 of 2024 seeking specific performance of a contract with application for interim protection. The Trial Court refused to grant ad interim protection to the petitioner. The petitioner filed a writ petition in WP No. 26432 of 2024. On 27.09.2024, this Court, in terms of IA

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HC-KAR

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No.2, restrained the respondents from alienating or creating any third party interest over the schedule property. Further, this Court vide order dated 13.12.2024, disposed of the said writ petition by recalling the order dated 27.09.2024 and with a direction to the Trial Court to consider the said interim applications. Further, respondent Nos.1 and 2 also filed an application under Order VII Rule 11 read with Section 8 of the Arbitration and Conciliation Act, 1996 on the pretext of arbitration clause. Further, the petitioner filed an application in the suit seeking to withdraw the proceedings in OS No. 1642 of 2024 on the pretext of arbitration clause. The petitioner invoked the arbitration clause by issuing the arbitration notice dated 24.09.2025. In response, respondent No.3 issued a reply dated 23.10.2025 opposing the invocation of arbitration clause. Though, respondent Nos.1 and 2 replied to the notice, they did not concur in appointing the Arbitrator. Hence, this petition.

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HC-KAR

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Heard the arguments of the learned counsel for

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the petitioner and the learned counsel for the respondents.

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Learned counsel for the petitioner submits that

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the arbitral dispute arose between the parties to the petition and the petitioner has issued an arbitration notice by invoking the arbitration clause. She submits that though the petitioner has filed a suit in OS No. 1642 of 2024, the petitioner has already moved an application for withdrawing the same on the pretext of the arbitration clause. Accordingly, on these grounds, prays to allow the petition.

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Per contra , the learned counsel for the respondents submits that if the instant petition is allowed it would lead to parallel proceedings. He submits that the respondents have also filed an application under Order VII Rule 11 read with Section 8 of the Act. He submits that the dispute which arose between the parties to the petition is not arbitral in nature and accordingly, prays to dismiss the petition.

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HC-KAR

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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 would arise for consideration in this petition is as follows:

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Whether the petitioner has made out a ground to refer the dispute to the arbitration in terms of clause 6.7 of the Escrow Agreement and clause 17 of the Settlement Agreement as per the provisions of the arbitration and conciliation act and the Rules?

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It is undisputed that the petitioner and the respondents entered into the JDA and GPA dated 17.06.2010 for the developmental project. However, owing to several issued the project became the subject of multiple legal proceedings. The parties also entered into settlement agreement dated 28.10.2020. Further, the parties entered into the deeds of cancellation of JDA and GPA. The parties decided to place the deeds of cancellation with Escrow agent. Respondent No.3 was appointed as Escrow agent and escrow agreement dated 16.02.2022

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HC-KAR

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came to be executed. The respondent went on failing in discharging their obligations. The petitioner filed a suit in OS No. 1642 of 2024 for specific performance of a contract. The respondents filed an application under Order VII Rule 11 read with Section 8 of the Act. The petitioner also filed an application for withdrawing the proceedings in OS No. 1642 of 2024.

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There is an arbitration clause and the petitioner invoked the arbitration clause by issuing the arbitration notice dated 24.09.2025. Though, the respondents replied to the arbitration notice, they did not concur in appointing the Arbitrator. I have perused the arbitration clauses in memorandum of settlement and in the escrow agreement, which read as follows:

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“ 17. DISPUTE RESOLUTION

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Any dispute under and/or in relation to this Agreement shall initially be resolve by mutual discussions, deliberations etc. On failure of such amicable discussions, the dispute shall be submitted to the arbitration, by a sole arbitrator nominated by

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the parties. The arbitration shall be governed by the Arbitration and Conciliation Act, 1996 as may be amended from time to time.

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If the parties are unable to agree on the nomination of a sole arbitrator within a period of 30 (thirty) days from the date of any of them seeking appointment of arbitrator, the Parties shall be entitled to secure appointment of the Arbitrator under the provisions of the Arbitration and Conciliation Act, 1996.”

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“ 6.7 DISPUTE RESOLUTION

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Any dispute under and/or in relation to this Agreement shall be submitted to arbitration by a sole arbitrator nominated by the Parties. The Arbitration shall be governed by the Arbitration and Conciliation Act, 1996 or any statutory reenactment thereof, as may be in force then. The place of arbitration shall be Bengaluru. The language to be used in the arbitration proceedings shall be English.”

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From the perusal of the aforesaid arbitration clauses in the respective agreements, it is evident that in the event of any dispute regarding the agreements, the same shall be referred to and resolved by the arbitration. Admittedly,

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HC-KAR

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there is an arbitration clause and the petitioner issued an arbitration notice by invoking the arbitration clause.

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Although the petitioner has filed an application

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in the suit seeking withdrawal of the proceedings with a liberty to initiate arbitration proceedings and the same is pending consideration, the learned counsel for the petitioner in addition to it, undertakes before this Court to withdraw the suit.

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In view of the above discussion, the petitioner

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has made out a ground to refer the dispute to the arbitrator. Accordingly, I answer the point in the affirmative.

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For the foregoing discussion, the following result:

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ORDER

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The CMP is allowed.

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Hon'ble Mrs. Justice J.M.Khazi, Former Judge of this Court is appointed as the Sole Arbitrator to

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resolve the dispute between the parties to the petition as per the provisions of the Act.

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The Office is directed to communicate a copy of this order to the learned arbitrator and the director of the Arbitration and Conciliation Centre, Bengaluru.

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The Office is directed to return the original or certified copy of the documents after retaining the photo copy of the same.

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Pending application(s), if any, shall stand disposed of.

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Sd/(ASHOK S.KINAGI) JUDGE

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PA [ONLINE]

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List No.: 2 Sl No.: 35

Satchmo Holdings Limited v. B Abhayraj Shetty

Case brief

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Satchmo Holdings Limited v. B Abhayraj Shetty

Case brief

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