Allowed

M/s. Mathrubhuumi Infra v. Sri. C. Lakshmikar Reddy

Telangana HC15 Dec 2023ARBAPPL/133/2023

Case brief

AI extract

What is this about?

The High Court allowed an application to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 to adjudicate a dispute between real estate developers and landowners regarding a refund, determining that a dispute existed regardless of partial payment.

What did the court decide?

Appointed Sri Kuthuru Ravinder Reddy as arbitrator to adjudicate the claims and disputes between the parties.

M/s. Mathrubhuumi Infra Vs Sri. C. Lakshmikar Reddy — Arbitration | Telangana HC (2023)

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[³¹⁸³¹

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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FRIDAY, THE FIFTEENTH DAY OF DECEMBER TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SRI JUSTICE B.VIJAYSEN REDDY

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ARBITRATION APPLICATION NO: 133 OF 2023

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Between:

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M/s. MATHRUBHUUMI INFRA, (Pan No. ABCFM4622M) A registered Firm, vide its No. 636 of 2016, having its registered officer at Flat No. 202,2nd Floor, Sai Balaji Complex, Plot Nos. X-'1 , X-2, X-27 and X-28, Mahadevapuram Residential Project, Phase-lll, Gajularamaran Village, Quthbullapur Mandal, Medchal-Malkajgiri District, Telangana State - 500 055 Rep by its Partner Sri. Y. Yadagiri Reddy, S/o. Late Ranga Reddy, Aged about 36 years, Occ: Business, R/o. Flat No. Z-2 Mahadevpuram Village and GHMC Circle, Quthbullapur Mandal, Medchal-Malkajgiri District.

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Mr. Pagidi Mahender Reddy, S/o. Late P. Mohan Reddy, Aged about 59 years, Occ Business, R/o. H. No. 2-127, Gajularamaram Village and GHMC Circle, Quthbullapur Mandal, Medchal-Malkajgiri District

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..,APPLICANTS

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AND

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'1. Sri. C. Lakshmikar Reddy, S/o. Sri. C. Narayana Reddy, R/o. Flat No. 504, Highness Residency, H. No. 3-6-527, Street No 7, Himayatnagar Hyderabad -29

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Smt. C. Nagamani, Wo. C. Lakshmikar Reddy, R/o. Flat No. 504, Highness Residency, H. No. 3-6-527, Street No. 7, Himayatnagar Hyderabad - 29

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...RESPONDENTS

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...Respondent

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Arbitration Application praying Under Sub-Sections^{(5&6) of Section 1l of} the Arbitration and Conciliation Act,^{'1996 R/w Para 3(i)(c) of Schemefor} Appointment of Arbitrators,^{2006 praying that this Hon'blecourt may be pleased} to appoint an arbitrator^{to resolvethe disputebetweenthe parties whicharose} under the Development^{Agreement - cum - lrrecovcableGeneral Powerof} Attorney dt.27.08.2018^{of Arbitration and conciliationAct,1996 and Rules framed} there under.

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.r.:l'

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Counsel for the Petitioner :M/s. POTTIGARI SRIDHAR REDDY

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Counsel for the Respondents : M/s- SRINIVASA RAO BODDULURI

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The Court made the following:

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'iJ,

(-)

HONOURABLE SRIJUSTICE B. VIJAYSEN REDDY ARBITRATION APPLIcATIoN No.133 OF 2023

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ORDER:(ORAL)

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This application is filed under Section 1 1(5) & (6) of the Arbitration and Conciliation Act, 1996 (for short'Act 1996') read with Para (3) (i) (c) of the Scheme of Appointment of Arbitrators, 2006, for appointment of an Arbitrator for adjudicating the disputes between the applicants and the respondents arising out of the Development Agreement-cum-lrrevocable General Power of Attorney dated 27.08.2018.

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The respondents being owners of Plot No.57 admeasuring 327 sq. yards in Survey No.20, and Plot Nos.58 and 59 in Survey Nos.'19 to 36 admeasuring 358.58 sq. yards and 408 sq. yards, respectively, situated at Khanamet Village, Seriilngampally Mandal, Ranga Reddy District, entered into a Development Agreement-cum-lrrevocable General Power of Attorney daled 27.08.2018 wrth the applicants and Late Mr. Mulugu Uma Reddy for development of the subject^property.

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The case of the applicants is that they were^authorisedto develop the subject^property by^{constructing a buildingcomplex} comprising of cellar⁺ stilt⁺ 5^{upper floors under the Development} Agreement dated 27.08.2018.^{On the date of execution of the} Development Agreement,^{a sum of Rs.2'00,00,000/- was paid by the}

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uvR..I ARUAPPL.No lll 23

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applicants to respondent Nos.'l and 2 as an interest free refundable deposit, out of which a sum of Rs.90,00,000/- was transferred to the respondents through online and the remaining amount was paid through cash.

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It is submitted that under the Development Agreement, respondent Nos.1 and 2 have specifically referred to the proceedings of the regularisation of the subject three plots. After execution of the Development Agreement, the applicants made application to GHt\IC on 14 09 2008 in File No 2/C2lt176301201B for permission to construct a residential building consisting of cellar + stilt + 5 upper floors. The GHMC issued a shortfall letter on 31 .OB.2O2O citing requirement of ownership certificate, ULC clearance, land use certificate and certain other information in relation to the subject property. The same was informed to the respondents and they promised to supply all the documents required by the GHMC. However, citing corona pandemic and normal disturbance of work of the Government Offices, the respondents did not furnish the required documents. Urtimatery, the GHI\4C issued shortfall notice dated 01 .OS.ZO21 requiring the applicants to furnish information and documents as sought in the earlier shortfail retter dated 31 .09.2020. However, the respondents did not furnish the documents. ln the meanwhile, many third party claims

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I}VR,J ARBAPPL No.lli 23

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surfaced over the subject property which hindered further progress of the development of the subject property.

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lt is stated that the applicants came to know about the dispute pending between the respondents and M/s. lnterlux Hotels Limited which arose prior to the execution of the Development Agreement and the said Company is constructing a commercial building in the subject property and the same is nearing completion. lt is submitted that the applicants have realised that the respondents have entered into the Development Agreement with an intention to cheat and defraud them from the inception. The dispute over the subject property with M/s. lnterlux Hotels Limited was suppressed by the respondents. The layout proceedings given to the applicants pertain to some other plots in Survey No.206 of Kondapur Village, Survey No.3'1l1 of l\Iadinaguda Village and Survey No.211 of Chandanagar Village.

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Further, in respect of the subject property, a suit on the file of the Principal District Judge, Ranga Reddy District at L.B. Nagar, for specific performance, was filed by one tt4r. G. Krishna Reddy against the respondents and the same was decreed on 17.11.2015. lt^is further submitted that due to the dispute raised^{by thirdparties,the} respondents made an application^{to the authorities for demarcation of} the subject^plots which was also not disclosed^{to the applicants.}

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I]VI{.J n ItBAPl,l- No.l:13 23

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ln view of the above circumstances, the applicants issued legal notice dated 17.04.2023 to the respondents to refund the amount received by them as interest free refundable deposit with interest at the rate of 18Vo per annum and compensation of Rs. 1,00,00,000/-. The respondents issued reply notice dated 04.05.2023 making untenable a llegations.

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B. lt is submitted that Clause 33 of the Development Agreement provides for resolution of the disputes through Arbitration.

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Learned counsel for the applicants submitted that in the notice daled 17.O4.2023, the applicants demanded the respondents to pay a sum of Rs.2,00,00,000/- along with interest and compensation, and if the demand is not complied, warned the respondents that Arbitration Clause 33 of the Development Agreement would be invoked.

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Learned counsel for the respondents submitted that there is no arbitral dispute between the parties. The applicants have transferred only Rs.90,00,000/- out of Rs.2,00,00,000/- refundable deposit and the balance amount was paid through two cheques, one for Rs.50,00,000/_ and the other for Rs.60,00,000/- which were not realised. lt is submitted that the applicants were aware of the legal disputes pending in respect of the subject property. The applicants have not proceeded with construction under the Development Agreement, and thus, failed

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I] V It.J Al{8.^PPI-.No.l-ll 2l

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to perform their part of contract. There is no cause of action for filing this arbitration application.

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Heard learned counsel for the applicants and the learned counsel for the respondents

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ln the light of the above facts and circumstances, it is clear that there is a dispute between the parties as a claim of refund of Rs.2,00,00,000/- is made by the applicants against the respondents. lt is contended by the respondents that out of Rs.2,00,00,0001, they have received only Rs.90,00,0001. However, the said dispute needs to be resolved before the Arbitrator. lt is immaterial whether the claim is for Rs.2,00,00,000/- or Rs.90,00,000/- The applicants raised a dispute in terms of Clause 33 of the Development Agreement for refund of Rs.2,00,00,0001 along with interest at the rate of 1B% per annum and compensation of Rs.1,00,00,0001. Thus, the contention of the respondents that the matter does not require arbitration is u ntenable

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Accordingly, the arbitration application is allowed appointing Sri Kuthuru Ravinder^{Reddy, Retired DistrictJudge, H.No.2-17-82'} Bank Colony,^{Kalyanpuri, Uppal, Hyderabad,as Arbitratorto adjudicate} the claims and^{disputes betweenthe parties and to pass an award in} accordance with^law.

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':.f

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I]'I{..I ARBAPPL.No.li i 2l

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The learned Arbitrator is entitled to fees as per the rates specified

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in the Fourth Schedule to Act 1996, inserted by Act 3 of 2016 with effect from 23.102015, which shall be borne by both parties in equal

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To,

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Sd/. C.V. MALIKARJUNA^VARMA JOINT REGISTRAR v //TRUE COPYI/

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SECTION OFFICER

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Sri Kuthuru Ravinder^{Reddy, Retired DistrictJudge, H' No 2-17-82' Bank} Colony, Kalyanpuri,^{Uppal' Hyderabad. (By Special Messenger) (Along with a} Copy of affidavit^{and materialpapers)}

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One CC to SRI^{POTTIGARI SRIDHAR REDDY' AdvocateIOPUC]}

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One CC to^{SRl. SRINIVASARAOBODDULURI, Advocate[OPUCI}

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Two CD Copies

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tr's

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HIGH COURT DATED:1511212023

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ORDER

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ARBAPPL.No.133 of 2023

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1 He stAtG
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o 10 JAN ?02I
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ALLOWING THE ARBITRATION APPLICATION

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M/s. Mathrubhuumi Infra v. Sri. C. Lakshmikar Reddy

Case brief

What is this about?

What did the court decide?

M/s. Mathrubhuumi Infra v. Sri. C. Lakshmikar Reddy

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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Case details

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