Allowed

M/s Suchir India Infratech Limited Pvt. Ltd. v. M/s R3 Capital (Partnership Firm)

Telangana HC5 Jul 2022ARBAPPL/151/2021

Case brief

AI extract

What is this about?

The High Court of Telangana allowed an arbitration application filed by a developer company against joint owners of land. The court appointed a sole arbitrator under Section 11 of the Arbitration Act, noting no prima facie challenge to the arbitration agreement's validity.

What did the court decide?

Appointment of Sri Justice A. Rajasheker Reddy as the sole arbitrator to adjudicate the disputes arising under the Development Agreement-Cum-General Power of Attorney.

M/s Suchir India Infratech Limited Pvt. Ltd. Vs M/s… — Company and Corporate | Telangana HC (2022)

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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TUESDAY ,THE FIFTH DAY OF JULY TWO THOUSAND AND TWENTY TWO

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PRESENT

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THE HONOURABLE SRI JUSTICE K.LAKSHMAN

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ARBITRATION APPLICATION NO: 1s1 OF 2021

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Between:

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M/s Suchir lndia lnfratech Limited Pvt Ltd, with its registered office at 50-8, Suchir Capital Apollo, Cross Jubilee Hills, Hyderabad - 96. Rep. by its CEO & Manarging Y.KIRAN KUMAR S/0 Late Sri Y.Venkateshwarlu, Aged About 50 Years, Rl/o Hyderabad.

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...APPLICANT

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AND

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M/s R3 Capital (Partnership Firm), With its office at Flat No.101 ,^"A" Block, Badruka Enclave, Road No.12, Banjara Hills, Hyderabad, Rep. by its Managing Partner Mr. Bhaskar Sayyapa Raju.

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Sri Gadde Venkat Naveen, S/o Gadde Butchi Babu, R/o Villa No. 89, Type A West Facing Hill Ridge Villas, Gachibowli Serlingampally Mandal, RR District.

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Sri R.Phanendra, S/o Sri R.S.Rao, Rl/o Flat No. G 104, Nagarjuna Residency, Opp. NASR School, Gachibowli, Hyderabad

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Sri M.B Srinivas, S/o Late M.B.Malleshwar Rao, Rl/o 905, H-Block, NCC Urban, Gachibowli, Hyderabad - 32.

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Sri S.Chakradhar, S/o Sri S.Narsimha Rao, Fl/o Flat No. 103, My Home Madhuban, Srinagar Colony Road, Ameerpet, Hyderabad.

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Sri Gadde Butchi Babu, S/o Sd Narsaiah, Rl/o Villa No. 74, Type A West Facing, Hill Ridge Villas, Gachibowli, Serlingampally Mandal, RR District.

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Sri Ch.Venkateshwarlu, S/o Sri C.M.Sharma R/o F-'145, Prime Rose,^L and T Apartments, Gachibowli, Hyderabad - 32. ...RESPONDENTS

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Arbitration Application Under Sub - Section (5) and⁽⁶⁾ of Section^{'1 '1} of the Arbitration and Conciliation Act,^'1996 read with Para^{(3) (i) (c} ) of Scheme^for appointment of Arbitrator, 2006^praying that this Hon'be Court may be^pleased to appoint a Sole Arbitrator to adjudicate the claims and disputes^{arising under the} DEVELOPMENT AGREEMENT-CUM-GENERAL POWER OF ATTORNEY dated 1711012015 bearing document No. 5646 of 2015^.

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Counsel for the Applicant :SRl. D. RAGHAVENDAR RAO

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Counsel for Respondent No.1 : SRI M. HARI BABU

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Counsel for Respondent No. 3, to 5 & 7 : SRI M.V. PRATAP KUMAR, Counsel for the Respondent Nos. 2 and 6 : NONE APPEARED

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The Court made the following: ORDER

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HON'I}LE SRI JTJS'IIC'E K. LAKSIIMAN ARBITRATION APPLICATION No.l5l OF 2021

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ORDER:

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'l'he present Arbitration Application is filed under Section I I ol the Arbitration and Conciliation Act, [996 (hereinaiter 'the Act, 1996') lor appointment of a sole arbitrator to rcsolve the disputes bclween the parties.

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Heard Mr. D. Raghavcndar Rao, learncd counsel lor the Applicant, Mr. M. Hari Babu, learncd counsel lbr Respondcnt No. I and Mr. M.V. Pratap Kumar, learncd counsel fbr l{espondent Nos. l. 4, 5 and 7. Despite serving the noticc, thcre was no represcntation on behalf of the Respondent Nos. 2 and 6.

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The Applicant and Rcspondent Nos. 2 to 6 are the^joint owners of land admeasuring Ac.03-9.4950 Gts. situated in Sy. No. 278 of Puppalguda Village, Ra.iendranagarMandal, Ranga Reddy District (hercinafler relerred as'subject prope(y'). The Applicant and Rcspondent Nos. 2 to 6 cntered into a Deve lopment Agreement - ctllrl

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Kl...r Arb.Appl.No. I 5 I of 2021

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Cieneral Pou,erof Attorney (hereinafter'DAGPA') dated 17.10.2015 with Responclent No. l. As per the terms of the DAGPA, it was agreed betwecn the parties that Respondent No. I will develop the subject propety by constructing a rnulti-storied buitding in the said land in a tirre bound manner.

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According to the Applicant. Respondent No. I had violated the material terms of the DAGPA and has not even commenced the development works as agreed between the parties. The Applicant states that after exchange of various correspondences, it terminated the DAGPA by issuing a legal notice dated 14.12.2016. Further, the Applicant stetcs thal Respondent No. I failed to co-operate in cornpleting the lormalities for cancelling the DGAPA. Therefore, it invoked Clause 54 of thc DAGPA and issued an arbitration notice dated 15.12.2020 seeking appointment of arbitrator. Clause 54 of the DAGP,\ is extracted below:

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"54. ln case ofany dispute or difference arising out ofor in pursuirnce ol or in respect of this Agreement, the same

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KI-.J

Arb.Appl.No. I 5 I o1202^I

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shall be referred to an arbitrator mutually agreed upon, in accordance with the terms of this Agreement and the provisions of the Arbitration and Conciliation Act, 1996 in other respects. If both the Parties are unable to find mutually agreed Arbitrator, the Owner and Developcr shall be entitled to appoint one arbitrator each and both^the arbitrators shall appoint an umpire. The arbitral proceedings shall be subject to the .jurisdiction of the Courts of Ranga Reddy District only. The remuneration fbr the Arbitrator shall be 1% ol the value ol the dispute or Rs.2,00,000/-, in case it is not capable ol being valued in terms or money. The Arbitrator(s) shall initiate^proceedings within one month ol relerence and conclude the proceedings within three months thereafter."

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Respondent No. I in its reply to the said arbitration notice and in its counter affidavit disputed the termination of the DAGPA on the ground that it is a composite agreement and the Applicant cannot unilaterally terminate the same. According to Respondent No. l, the Applicant being a joint owner cannot tetminate the DAGPA without the consent ol other joint owners (Respondent Nos. 2 to 6).

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KT,.J Arb.Appl.No.l5t of 2021

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6.^-l'his Court cannot accept the contentions of Respondent No.

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l. The issue whether termination is legal or illegal and the issue whether the terms of the DAGPA were violated are factual and constitute arbitlable disputes as per Clause 54. Further, it is relevant to note that Ilespondent Nos. 3,4.5 and 7 in their counter affidavit have stated that they have no ob.jection in appointment of an arbitrator by this Court. Further, despite notice no objections were filed against appointment ol arbitrator by Respondent Nos. 2 and 6. Therefore. Respondent No. I cannot contend that arbitration clause was invoked witlrout the consent ol other^joint owners.

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Therefore, it is clear from the facts that none of the parlies including Respondent No. I dispute the existence of Clause 54 which provides for resolution of disputes through arbitration. It is relevant.to note that the Supreme Cou( in Vidya Drolia v. Durga Trading Corporationr laid down the test to exercise power under Section I I

(202 r) 2 SCC r

KL.J

I I

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Arb.Appl.No.l5 I of 2021

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of the Act, 1996. ln his separate opinion, I'{on'ble Sri Justice N.V.

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I{arnana held as lir Ilor.vs:

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"244. Befbre we part, the conclusions reached, with respect to Question^I ,^are:

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244.1. Sections 8 and I I ol the Act have the same ambit with respect to^judiciaI interfersnce.

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244.2. Usually. subjecl-matter arbitrability cannot be decided at the stage of Section 8 or I I ol the Act. unless it is a clcar case ol deadwood.

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244.3.The court. under Sections 8 and ll. has to refer a matter to arbitration or to appoint an arbitralor. as the case may be, unless a party has cstablished a prima Iacie (summary findings) case ol non-oxistence ol'valid arbitration agrcement, by summarily portraying a strong case that he is entitlcd to such a finding.

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244,4. The court should refer a matter if the validify of the arbitration agreement cannot be determined on a Drima facie trasis, as laid down above i.e. "when in doubt. do refer".

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244.5, The scope of the court to examine the rrrima facie validify of an arbitration agreemcnt includes only: 244.5.1. Whcther thc arbitration asreement was in

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writins? or

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244.5.2. Whether the arbitratio n agreement rvas contained in oxchange ol'letters, teleco m m u nication. etc,? 244.5.3. Whethcr thc core contractual insredients^qua thc a rbi{ ratio n aglcemcnl were fulfilled?

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244.5.4. On rare occasions, whether the subiect-ntatter of dispute is arbitrable?"

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KL.J Arb.Appl.No. l5l ol202l

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In the presenr case. there is no dispute that the parties by incorporating CIause 54 had agreed to resolve their disputes through arbitration. Therefore, it is apnropriate to refer the dispute to arbitration. 1-he parties are at liberty take all the available defences belore the leamed arbitrator.

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ln light of the aloresaid discussion and the law taid down by the Supremc Court, the present arbitration application is allowed. Accordingly, Sri Justice A. Rajasheker Reddy, Irormer Judge, I1igh Court for the State ol Telangana, I{yderabad, is appointed as the sole arbitrator to resolve the disputes between the parties.

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As a scquel. the miscellaneous applications, il any,, pending in

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the Arbitration Application shall stand closed.

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SD/.B.S.CHIRANJEEVI JOINT REGISTRAR //TRUE COPY// Gb SECTION OFFICER

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Sri Justice A. Rajasheker Reddy, Retired Judge of High Court, Plot No.22-A ,Road No. 12, MLA Colony Banjara Hills Hyderabad - 500033. (By Special Messnger)(along a copy Arbitration Application affidavit and material papers filed with A.A)

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