Dismissed

The Central Excise Officers Mutually Aided Housing Co-operative Society Ltd. v. M/s Sbec Infrastructures Pvt. Ltd.

Telangana HC8 Dec 2020ARBAPPL/18/2020

Case brief

AI extract

What is this about?

The High Court of Telangana dismissed an application filed by a housing cooperative society for appointing an arbitrator. The court held that the underlying sale agreements were insufficiently stamped and therefore could not be looked into under the Indian Stamp Act, barring the court from considering the arbitration clause.

What did the court decide?

Arbitration Application dismissed; applicant permitted to approach court after documents are impounded.

The Central Excise Officers Mutually Aided Housing… — Arbitration | Telangana HC (2020)

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IN THE HIGH COURT^{FORTHE STATEOF TELANGANA}

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AT HYDERABAD

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TUESDAY, THE EIGHTH^{DAYOF DECEIVBER} TWO THOUSAND^{AND TWENTY}

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PRESENT

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THE HONOURABLE^{SRIJUSTICEA. RAJASHEKER REDDY}

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ARBITRATION^{APPLICATION NOi 18 0F 2020}

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Between:

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The Central^Excise Officers IVutually^{Aided Housing Co-operative Society} - i"oi"i"nt"a nv its Authorized Signatory 9'i D' Limited, Venkateshwar Hyderabad,^Rao, slo.^{"o. -V.} Gopal',^{Ruo, aged. 68 years Occ Retired} Employee R/o^105, SaiKeerthi Apartment.Ganesh^{Nagar.Ramanthapur'} Hyd era bad^. ...Applicant

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AND

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1.lV/sSBEClnfrastructuresPrivateLimited,Office3-16-83/1'Nehrunagar'-r" n"Gpff Hyd e ra oai-rep resented^by its l,4anaoino Director. Sri D. Narasaiah. S/o. Late o.^{Naryana.'1i.. 59;;;;;b;'tBusinesi' {ro 3-to-aglt' Nehrunasar'} RamantPur, HYderabad.

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C;;gl; ft;doy'cr,inna^{rswarReddv. S/o Chegireddv Chinna Pothi Reddv} A.rp 6^j vears ,r.. ortin"ti, nlo^{'n rlo fl-2d11'S r'i Krishna NagarColony} ilB;|. srthdvr'ulgh-^{sih"oi oaddiamnaramDtlsr rknaoar' Hvderabad'}

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3 Cheggi^{Reddy padma-vi'ti"ilw7Jchtgi ReOOy CninnaEswar-Reddy,Age 52} vears. occ. tlousewrte,^{Rto H No 17:28/1 Sii Krishna} .Nagar^Colony'Near

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a S"rlrioJv, Smt Gaiam^Hl lt/l'alleshwari,^{gh sir,ooi, oroo W/o. Gajam Shankraiah' i,, na ram Dilsu kn'sgf Age'} '^{Hyl:f!-1d 5u years'ucc} ^^^ - [;i,;;il;. RE i.N; 11-103/6 Road No I Viiavapuri colonv' Kothapet'

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Saroonagar. HYderabad.

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s. 6uim cir"uio'nan,^{sl6-CajamVeeraiah, Asg:79 years occ Business'R/o} " 6. Gaiam iL.r". r7-Cz Suiatha, sii Wlo ttt"gat col6ny,^{Ca'iJm<ii,,'Ot'lan',} Dilsuknagar,^nge' Hyderabad^{SO years' Occ Housewife'R/o} -. " HL.r". r7:Oz Sti Nagat Colony, Dilsuknagar, Hyderabad' T Smt GaiamViiava^{r-arsrr-riilWio-Cili' Vatiagiri'ag9 52 years'Occ Housewife'} ' il;. Hru. i7-ii sn Nagai cotonv,bilsuknagar' Hvderabad ..ResPondents

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..ResPondents

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Application^{under Sectionl l(5) and (6) of the Arbitration andConcillation} Act, 1996 read^{with Schemefor Appointmentof Arbitrator prayingthat for the} reasonsstatedintheaffidavitfiledtherewith,theHighCourtmaybepleasedto

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appoint an^{arbitratorto adjudicatethe claims and disputes betweenthe} Applicant and^ResPondents

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award the costs^{of the present application'and}

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ilt pass such other order^{or orders as the Hon'bleCourt may deemfit and} proper in the circumstances^{of the case}

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Counsel for the^{Applicant:SRl. KIRAN PALAKURTHI}

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Counsel for the^{Respondent No.1: SRI A VENKATESH}

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Counsel for the^{Respondent No'2 to 7: NONEAPPEARED}

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The Court made the^{following:ORDER}

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HON'BLE SRI JUSTICE A.RAJASHEKER REDDY

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Arbitration Application No.18 of 2020

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ORDER:

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This application is filed under Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996, seeking to appoint an arbitrator to adjudicate the claims and disputes between the applicant and the respondents

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The brief facts of the case are that the applicant is a Society registered in the name of Central Excise Officers Mutually Aided Housing Cooperative Society Limited, and that as the applicant intends to purchase house plots for its members as a welfare activity, it approached the 1't respondent and thereafter, they entered into an agreement dated 05.11.2015, as per which, the 1't respondent agreed and promised to develop the land in Sy.Nos.18 to 30, 36, 61,62,63,64, 65 and 66, total admeasuring Ac.97.00, situated within the revenue limits of Ameerpet village of Maheshwaram lt4andal, Ranga Reddy District. First respondent had initially agreed to sell 238 plots admeasuring about 400 sq. yards each, for a consideration of Rs.23,80,00,000/- and that the applicant paid an amount of Rs.1 crore towards earnest money by way of two cheques, which were acknowledged by the 1't respondent. ln addition to the above agreement of sale dated 05.11.2015, the 1't respondent had entered into another agreement of sale dated 09.02.2016 with the applicant for selling of 70 plots admeasuring about 400 sq. yards each, approximately Ac.9-36 gts, out of Sy,Nos.20,21 ,22,23,65 and 66 of Ameerpet Village, lvlaheshwaram Mandal, Ranga Reddy District, for a consideration of Rs.7 crores and the applicant has paid an amount of Rs.1 crore towards earnest money by way of two cheques, which were acknowledged by the 1't respondent. That the applicant also paid a sum of Rs.50 lakhs on

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..2,,/

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' o,o nppr no.ra *18)d

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22.02.2016 to the 1'r respondent by way of^{cheque bearingNo.105375,} which was acknowledged by the 1ttrespondent^{and as such, the applicant} paid total sum of Rs.2 and half crores to the lstrespondent.^{While so, as} disputes arose between the^{parties,there wereexchangeof noticesand} ultimately, the applicant issued notice dated^{17.09.2019invoking the} arbitration clause in the agreement^{dated 05.11.2015,but there was no} reply from the respondents. Hence, the^{present applicationis filed.}

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The 1't respondent filed counter affidavit^{admittingthe execution of} sale agreements. However, it^{is stated that the applicant society did not} perform its part of the obligations as required^{in the agreement of sale and} memorandum of understanding and^{it did not competethe formalities} within the stipulated time. lt is^{further stated that the applicanthas} committed breach of agreements^{and the l"trespondentis not at fault.}

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The detailed averments in the^{counter affidavit need not be produced} herewith since this application is^{limited to the finding of existenceand} invocation of arbitration clause.

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Heard Sri Kiran Palakurlhi,^{learned counsel for the applicantand} Sri A. Venkatesh, learned counsel^{for the 1"t respondent.}

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Learned counsel for the applicant^{submits thatas the 1"t respondent} has not disputed about the^{existenceand invocationof arbitrationclause,} the arbitration application^{needs to be allowed. He further submitsthat as} the delivery of^{possession is in dispute,the agreements dated05.'1 1.2015} and 09.02.2016 are sufficiently^{stamped. He also submits that since the} second agreement isⁱⁿ continuation^{of the first agreement and the words} mentioned in the second agreement^{refers to the first agreement andboth} the agreements are between^{same parties for the samepurpose,single} invocation of arbitration clause^{and single applicationis maintainable.ln}

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ARR. J Arb.Appl.No.l8 of 2020

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support of his contention, he relied on the judgment of the Apex Court in Ameed Lalchand Shah v. Rishab Enterprisesl.

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On the other hand, Sri A. Venkatesh, learned counsel for the 1st respondent, submits that as Clause 3(j) of the agreements dated 05.11.2015 and 09.02.2016 records delivery of possession, the applicant is liable to pay stamp duty since the documents are liable to be stamped in terms of Explanation-l of Article 47 -A of Schedule l-A of the lndian Stamp Act, lBgg (for short'the Act') as if it is a sale. He further submits that since the documents were engrafted on Rs.'1 00/- stamp papers, they are insufficiently stamped and as such, the agreements cannot be looked into by virtue of Section 35 of the Act unless they are impounded under Section 33 of the Act. He further submits that since there are two separate agreements containing different extents with different considerations, single invocation of arbitration clause and single application is not maintainable, and as such, the present application is liable to dismissed for mis-joinder of cause of action. He also submits that respondent Nos.2 to 7 are not parties to the sale agreements dated 05.11.2015 and 09.02.20'16 and as such, the arbitration application is not marntainable on the ground of mis-joinder of necessary parties. He relied upon the judgments of this Court reported in Veesarapu padma v. Rangineni Anitha2 and also the Apex Court in Duro Felguera S.A. Vs. Gangavaram Port Limited3 and also the order dated 19.05.2020 passed in Arbitration Application No.102 oI 2017 (Vishwasmulki and another v. M/s.Upakarma lnfrastructure Private Limited, Hyderabad).

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'lzora-1^{ts scc err} '^zottlyarorcz t elt 2or sc sozo

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ARR, J Arb Appl.No.18 of 2020

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ln view of rival pleadings and contentions, the issue that arises for consideration is, whether the arbitration application can be entertained basing on the sale agreements dated 05.'1^,1.20'15 and 09.02.2016.

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B. Clause-3(j) of the agreement dated 05.'1 1.201S reads as under

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"That the vendor has disclosed all material facts to the vendee in their possession as on date. The vendor hands over the ohvsica ssession of cheduled land nth of execution of ment of sal and the vendor undertakes to register the scheduled land after receipt of balance sale consideration to be paid by the vendee within (4) months from the date of this agreement of sale".

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9. Clause-3(j) of the agreement dated 09.01.2016 reads as under:

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"That the vendor has disclosed all material facts to the vendee in their possession as on date. The vendor hands over the physrcal possession of land cited to the vendee on the date of execut ron of thrs aoreement of sale'

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A reading of sub-clauses (j) of Clause 3 goes to show that the delivery of possession of schedule land was effected on the date of the agreement, which shows that the documents are liable to be stamped as if sale by virtue of Explanation-|, ll, lll of Article 47-A of Schedule 1-A of the Act, and even otherwise, the documents are liable to be stamped under Article 6-8 of Schedule 1-A of the Act. Admittedly, the documents are engrafted on Rs.100/-stamp papers, which shows that the documents are insufficiently stamped and that on another similar occasion, this Court dealt with the similar issue in Veesarapu Padma's case (2 supra). Since the said documents are insufficiently stamped, unless they are impounded by virtue of Sections 33 and 35 of the Act, the same cannot be looked into as held by Apel Court in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limiteda (Civil Appeal No.5820 of 201'l dated 20.07.2011) that unless the documents are properly stamped, the arbitration clause cannot be looked into, and the same is reiterated in ' :o I t(:) ru.n tq9(sc)

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',)

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Arb.Appl.No.18 of 2020

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Garware Wall Ropes Limited v.^{Coastal Marine Constructions&}

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Engineering Limiteds. ln view of the^{same,the other contentions cannot} be^gone into and kept open as^{the objection of the 1"t respondentis upheld} on this count.

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Accordingly, the Arbitration Application^{is dismissed. However,this} order will not^preclude the applicant from^{approachingthis Court afterthe} documents are impounded.

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