Allowed

M/s. Vishnu Infra and Energy Solutions Pvt. Ltd. ((an Msme Company) v. Mr. Anumandla Rameshwar Reddy

Telangana HC25 Jan 2024ARBAPPL/154/2023

Case brief

AI extract

What is this about?

In this arbitration application under Section 11 of the Arbitration and Conciliation Act, 1996, a bench allowed the applicant's petition for appointing a sole arbitrator. The dispute arose from a Development Agreement regarding property purchase and payment of an additional flat. The Court held that its scope is limited to verifying the existence of a prima facie arbitration agreement without delv

What did the court decide?

Appointment of Sri K.B. Narsimhulu as sole arbitrator and reference of the matter to arbitration.

M/s. Vishnu Infra and Energy Solutions Pvt. Ltd. ((an Msme… — Arbitration | Telangana HC (2024)

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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THURSDAY,THE TWENTY FIFTH DAY OF JANUARY TWO THOUSAND AND TWENTY FOUR

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PRESENT

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THE HON'BLE SRI JUSTICE K.LAKSHMAN

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ARBITRATION APPLICATION NO: 154 OF 2023

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Between:

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M/s. Mshnu lnfra and Energy sorutions p4 Llq (.(gn MSME company), represented by its Director sri Aciridhar Rao, S/o.A.Venliat Rao, aged sl Vears,- olo.^-piii N,jli rz, nojJ-r,roi,^{'-xar,i,i'ilirr",} Madhapur, Hyderabad-500033.^' ...AppLlCANT

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AND

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Mr' Anumandla Rameshwar Reddy, s/o.AJanardhan Reddy, aged 49 years, prot No.,r-867g/20 and 21, Flat No.s10, Kaveri Btock, Ghdronda Chamundeshwari,'opi. Vsi,'V,aU;" ii]gL;, Hyi#6"-o:'* 500004. ...iespduoerir

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Arbitration Application Under Section 11 (5) & (6) of Arbitration and Concitiation Act, 1996 praying that this Hon'ble Court may be pleased to appoint an Arbitrator u/s. 11 (5) and (6) of Arbitration and conciliation Act, .1996, read with para 3 (1) (d) of scheme for Appointment of Arbitrator 2006, as framed by the Hon,ble High court of Telangana, under clause No.22 of the Deveropment Agreement cum General power of Attomey (DAGPA) vide Document No.1801 of2o2o dated 27-01-2ozo for adjudicating the dispute between the application and the respondent herein.

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Counsel for the Applicant : SRt. D. S. V. c. NAGARAJU

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Counsel for the Respondent: SRt M. VtJAyA KUMAR GOUO

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The Court made the following ORDER:

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THE HONOURABLE SRI JUSTICE K. LAKSHMAN ARBITRATION APPLICATON No.154 OF 2023

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ORDER:

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The present Arbitration Application is filed under Section I I of the Arbitration and Conciliation Act, 1996 (hereinafter 'the Act, 1996') for appointment of a sole arbitrator to resolve the disputes between the parties.

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Heard Mr. D.S.V.G.Nagarajt, leamed counsel for applicant and Mr. M. Vijay Kumar Goud, Iearned counsel appearing for respondent.

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The applicant and the respondent have purchased residential plot bearing No.215 out of 267 sq.yards in Sy.Nos. 200, 203,204,205,212, 213,215/4,229,230,248,249,250,251,252 wrd 254 situated at Sri Sai Balaji Enclave, Mallampet Village and Grampanchayat, Dundigal Gandimaisamma Mandal, Medchal-Malkajgiri District, vide sale deed Nos.22336 and22325 of 2019 both dated 25.09.2019.

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They have entered into a registered Development Agreement - cum-General Power of Attomey (DAGPA) vide document No.1801 of 2020 dated 27.01.2020 on the terms and conditions specifically agreed

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thereon. As per the said DAGPA, applicant and the^{respondentare} entitled for 77 .5%o and 22.5"/o of respectively of super built up area of the developed property. Other conditions including period for the completion of the proposed building etc., are also specifically mentioned.

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According to the applicant, the super built up area is I1,500sft and respondent's share of 22.5Yo comes to 2587 .5 sft, along with two car parkings. Accordingly, respondent was allotted 2 flats consists of 1150sft each and an additional area of 287.5 sft. He has made^proposal to the applicant that he would take a third flat by purchasing the additional 863 sft. from applicant stating that he had two more brothers and that he would be happy to get the three flats in the same complex. Applicant obliged for the request of the respondent and allotted him a third flat admeasuring 1150 sft, for which the respondent accepted to pay an amount of Rs.21,57,500/- at the rate of Rs.2,500/- per sft, and interest of Rs.21,46,5521- and Rs.2,00,0001 for amenities i.e. a total sum of Rs.45,04,052/- for the said third flat after completion of casting of slabs and intimating the same on completion of casting of slabs for payment. The respondent intentionally did not honour the said commitment and

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pay the aforesaid arnount for the additional area of 863 sft. Despite several requests and specific request, the respondent failed to pay the said amount. Legal notice dated 12.12.2021 issued by the applicant was refused by the respondent. Thus, according to the applicant, there are disputes between the applicant and the respondent with regard to the aforesaid flat in third floor and payment of Rs.45,054,0521-. The applicant had also issued a notice dated 29.03.2022 invoking arbitration clause and proposed Sri Singam Srinivasa Rao as his nominee Arbitrator as per the terms of DAGPA. Respondent has issued reply with false and baseless allegations. Therefore, the applicant herein has filed the present application seeking appointment of Arbitrator.

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Respondent has filed counter admitting purchase of the aforesaid flat and entering into DAGPA. However, respondent denied the other allegations. According to the respondent, applicant himself has violated the terms of DAGPA dated 27.01.2020 and it has not obtained required permissions under law. Construction of additional.two floors is without permission. The applicant has to complete the construction within 15 months with grace period of three months which the applicant

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did not complete. The applicant did not inform readiness of the flat for occupancy whereas it came to know that the flats which were to be allotted and handed over to the respondent have been let out on rent and enjoying the rents. The applicant had filed a petition under Section 9 of the Act vide Arb. O.P.No.ll of 2022 against the respondent herein and the same was allowed vide order dated 05.12.2022 by the leamed II Additional District Judge, Medchal Malkajgiri.

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It is further contended by the respondent that applicant made false and baseless allegations against the respondent herein, more particularly, in paragraph No. l 1. t of the afhdavit i.e. "The Applicant has further^waited for^{the respondent to settlethe dispute amicablyafter} the said order was passed for interin relief but the respondent continued to harass the applicant by bringing in anti-social elentents to the premises and also to the ffice premises of the applicant and create nuisance to bring down the reputation of the applicant. " According to the respondent, the said allegation made by the applicant is false since on the said dates he was in USA. In poof of the same, he has filed travel documents

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The aforesaid facts would reveal that there are disputes between the applicant and the respondent with regard to DAGPA, dated 27 .01 .2020, flat and payment. According to applicant, respondent has to pay an amount ofRs.45,04,052/-. Respondent did not dispute about the purchase of the aforesaid property and execution of the aforesaid DAGPA. Respondent is opposing the present application on the^ground that it is the applicant which has violated the terms of the^DAGPAand that it has not obtained required permission under law and construction of additional floors are without permission. The applicant did not complete the construction within the agreed period of 15 months with^{grace period} of three months. Even according to'the respondent, there are disputes between the applicant and respondent which are arbitral disputes

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The contention of the respondent is that the applicant has made the aforesaid false allegation against the respondent and the respondent sought to take action against the applicant. This application filed under Section I l(6) of the Act seeking appointment of arbitrator to^resolvethe disputes between applicant and respondent.

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It is also relevant to note that the applicant herein has also filed an application under Section 9 of the Act vide fub.OP No.ll of 2022. The same was allowed by the learned II Additional District Judge at Medchal, Medchal-Malkajgiri District vide order dated 05.12.2022

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It is relevant to note that the scope of power of High Court under Section l1 of the Act, 1996 is extremely limited. The Court has to only see whether prima facie an arbitration agreement exists and the Court cannot go into disputed questions of facts which are to be decided v by the arbitrator as held by the Supreme Court in Vidya Drolia Durga Trading Corporationl.

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In the light of the aforesaid discussion, there are disputes between the applicant and respondent. Clause No.22 of the said DAGPA consists an arbitration clause which is as follows:-

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"In case of any disputes arises between the parties hereto touching these presents, the matter shall be referred to the arbitrators one chosen by each party and in case o[ any diflerence of opinion between such arbitrators, they shall nominate a cofirmon unipire and their award shall be final and binding on both the parties and he relevant provisions ofthe arbitration Act shall apply."

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t:. Invoking the said arbitration clause, the applicant has issued a notice dated 29.03.2022 proposing Sri Singam Srinivasa Rao, as an Arbihator. However, vide reply dated 13.04.2022, respondent denied the allegations made by the applicant and did not accept for appointment of the said arbitrator.

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As stated above, the disputes arose between the parties are to be resolved by the Arbitrator himself. Prima facie arbitration agreement exists between the parties in terms of Clause 22 of the DAGPA. Therefore, without prejudice to any defences available to the parties, this Court deems it appropriate to refer the matter to arbitration.

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In light of the aforesaid discussion and the law laid down by the Apex Court, the present Arbitration Application is allowed. Accordingly, Sri I(B.Narsimhulu, Retired District Judge, is appointed as sole Arbitrator to adjudicate the disputes between the parties.

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As a sequel, the miscellaneous Petitions, pending if any, shall stand closed.

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/,TRUE COPY//

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SD'- M. VIJAYA BHASKAR JOINT REGI$TRAR i rl sEcrror+6FFrcER

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Sri K.B.Narsimhulu, Retired District Judge, H.No.5-4-'1260, Road No.27, Sharada Nagar Colony, Vanasthalipuram, K.V. Ranga Reddy District, Telangana - 500 70.

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(By Special Messenger) (along with a copy of affidavit and materiat papers)

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