Allowed

M/s. Bastusilpi Constrction Pvt. Ltd. v. M/s. Andhra Prabha Publications Limited and Another

Telangana HC25 Jan 2024ARBAPPL/209/2022

Case brief

AI extract

What is this about?

Applicant sought appointment of arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 over disputes arising from a lease agreement regarding non-refund of Rs.13 crores paid as advance rent and security deposit. Holding arbitral disputes existed, the court appointed Dr. Justice Shameem Akther, Former Judge, as arbitrator.

What did the court decide?

Dr. Justice Shameem Akther, Former Judge of the High Court for the State of Telangana, appointed arbitrator to adjudicate disputes between the parties; miscellaneous petitions closed.

M/s. Bastusilpi Constrction Pvt. Ltd. Vs M/s. Andhra Prabha… — 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 HONOURABLE SRI JUSTICE^K.LAKSHMAN

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ARBITRATION AP PLICATION^{NO: 209OF 2022}

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Between:

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M/s. Bastusilpi Construction^{Pvt. Ltd., Repby their AuthorizedOfficer' ie Amit} Funae. fravinb reoistered office at Office^{No. 705 A, Suratwala Mark Plazzo, S.No'} 28, HiniewadilWa-kad Road,^{Pune,Maharashlra - 411O57}

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...APPLICANT

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AND

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M/s. Andhra Prabha^{Publications Limited and Another, D. No 8-3-} 293182tN75, Plot No. 75 Road^{No. 9, Jubilee Hills, Hyderabad,Telangana} 500033.

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Mr. Goutam Mootha, Age.,^{Occupation. Service, Address.Villa No. 20,} Meenakshi Bamboos, SY No.^{38-39,Opp. Ramky Towers, Gachibowli,K v} Rangareddy, Telangana-^500032.

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...RESPONDENTS

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Arbitration Application Under^{Section11 ( 5) & (o) ( a} )^{of the Arbitration} and Conciliation Act,^{1996 R/w. Scheme for Appointmentof Arbitrator,1 996} praying that this Hon'ble Court may be^pleasedto

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A. Appoint Arbitrator/^{Arbitral Tribunalin Hyderabad for resolving all disputes,} differences arising amongst^{the Petitionerand Respondentsherein arising out of} the Lease Agreement dated^30/07/2006;

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B. any other^just and equitable^{order be passedin the interestof justice.}

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C. To award the costs^o{ application

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Counsel for the Applicant^{: SRl. PARIKSHITH KUTUR}

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Counsel for the ResPondents^{: SRI SHIVARAJSRINIVAS Senior Counsel} representing SRt VISHWAJEET^REDDYD.

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The Court made the following^ORDER:

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HON'BLE SRI JUSTICE K. LAKSHMAN

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ARBITRATION APPLTCAT ION No.2O9 of 2o22

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ORDER:

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Fleard Mr. Parikshit Kutur, learned counsel for the applicant and Mr. Shivaraj Srin ivas, learned Senior Counsel representing Mr. Vishwajeet Reddy D, leamed counsel for the respondents. 2. This application is filed under Section I 1 (5) and (6) (a) of the Arbitration and Conciliation Acr, 1996 to appoint an arbitrator to adjudicate the arbitr.able disputcs between applicant and respondents.

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-l'he applicant and respondents have entered into a Lease Agrccment daled 30.07.2006 on the specific terms and conditions agreed there on with regard to leasing out Schedule-I and II prernises specifically rnentioned therein. Clause 30 of the said Leasc Agreernent deals with Arbitration. According to applicant, pursuant to the said l,ease Deed, it was transferred and remitted an interest fi'ce advance rental amount of Rs. I0 crores in or about 2006 in terms of clause 4 of the said lease agreement along with security deposit of Rs. 3 c'orcs in or about 2006 in te.ns of clause 2l of the said lease agreement. 'fhe physical possession of the

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)

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subject land was never delivered to the applicant for the reason that subject land was involved in rnultiple^protracted litigations^since 2005. According to applicant, respondents have to^{pay an amount} of Rs. 13 crores along with^{accrr"redinterest} @^{18% perannum} starting from the date of receipt of^{the amounts till the date of the} refund along with other expenses^{incurredby applicant for the said} land and rclating thcrcto^amounting to^{t{s.5,t14,100/-.Thus,} applicant narrating the^{disputesbctweenthe applicantand} respondents, invoking clause^{30 of the I.easeDced i.e., Arbitration,} issued a noticc datcd 09.08.2022^{to thc respondents demanding to} pay an amount of Rs. 13 crores^{along witl.r irrterest. The applicant} also proposed Sri G. Gopala^{Krishna Murthy, retiredDistrictand} Sessions Judge as an^{arbitratot to adj Lrdicatc the disputes'} Respondents have^{receivedand acknowledged the said notice'} Instead of giving consent fbr^{appointrnentof the said arbitrator} proposed by applicant, vide reply^{dated 06.09.2022,respondents} proposed the name of Sri Justice Nooty^{I{ama Mohan Rao (Retired)} Former Judge of High Court of Arrdhra^{Pradesh as an arbitrator'} Applicant has issued a reminder^{dated 12.10.2022,statingthat since} respondents have^{not agreed fbr the appoinlrnent of an arbitratoras}

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proposed by the applicant, they are constrained to take necessary steps in accordance with law. Thus, the applicant has filed the present application seeking appointrnent of an arbitrator to adjudicate the disputes between applicant and respondents.

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There is no dispute with regard to Lease Agreement dated 30.07 .2006 between applicant and respondents on the specific terms and conditions mentioned therein for the purpose of leasing out Schedule-l and II properlies mentioned therein. It is the specific contention of thc applicant that it has paid tlre amounts including an amounf of Rs. I0 crores towards inter-est free advance rental and Rs. 3 crorcs towards security deposit. Even then, respondents have not dclivered the vacant possession. Litigation is pending. Thus, according to applicant, respondents have to pay an amount of Rs. l3 crores along with accrued interest @ 18% per annum starting from the date of rcceipt of the amounts titt the date of the refund along with other expenses incurred by it for the said land relating thereto amounting to Rs.5,84, I 00/-.

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Clause 30 of the said Lease Agreement dated 30.07.2006 deals with Arbitration and the same is extracted below:-

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"Any dispute befween the parties hereto arising out of or in connection with. thts agreernent shall in principle be

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settled by the parties amicably in mutual consultation between item, in the event any such dispute cannot be resolved thereby, such di.spute shall be finally settlecl by arbitration in accordance with Arbitration and Conciliation Act, 1996. The plttce of arbitrcttion shall be at Hyderabad."

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Invoking tl-re said clause, applicant had issued a notice dated 09.08.2022 demanding the respondents to pay the said amount or give consent for appointrncnt of an arbitrator i.e, Sri C. Gopala Krishna Murthy, retircd Districl and Scssions .lr-rdge.

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l. Respondents gave a leply dated 06.09.2022. Paragraph Nos. 14 and 15 of the said reply are relevant and the salnc arc extracted

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below:-

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" 14. Our clients agree with your clients that the quantification of liabili4, of tlrc parties v,ould necessarily be adjudicated in an appropriale lrbitration Tribunal. However, as long as the orders passed by the Assistant Director, Enforcement Direclorate daled 02.09.202 I continue to be inforce, any Arbitration proceedings, even if concluded with an Award might still be a nonenforceable Award and therefore you qre requested to kindly instruct your clients to challenge the orders passed by the Assistant Director, [inforcement Directorate before initiating any Arbitration Proceedings, if so advised.

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Without prejudice to any of the contentions raised above, our clients state that given the complexity of the issues on hand and the nature of the disputes, it might be a better option to get lhe same adjudicated b1t a lletired Judge of High Court and towards this, our clients suggesl that Arbitration be referred to Justice Nool1, Rama Mohan

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)

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Rao (Retired) who is resident of HUDA, Enclave, Journalists Colony, Jubilee H ills, Hyderabad.^"

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Even, according to respor.rdents, there are disputes between applicant and respondents which ale arbitrable disputes. Applicant has to pay certain amounts and they have counter claim to be filed. The same has to be adjudicated in an appropriate arbitration tribunal. But, according to respondents as long as orders passed by the Assistant Director, Enforcement Directorate dated 02.09.2021 continue to be ir-r lorce, any Arbitration proceedings, even if concludcd with an Award might still be a non-enforceable Award 'fhercfore. respondcnts requcstcd the applicant to challenge the orders passed by the Assistant Director, Enforcernent Directorate beforc initiating any Arbitration proceedings, if so advised. But the said conl.ention of the applicant cannot be accepted. Applicant cannot challenge the ordcrs dated 02.09.2021 issued by Assistant Director, Enforcement Directorate. Applicant is not a party to the said order. ln fact, there is no award in favour of the applicant and applicant is only a lease holder. Therefore, the applicant cannot challenge the said orders dated oz.o9.2ozr of Assistant Dir-ector, Enfioreement t)irector.ate.

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It is also relevant to note that in paragraph No.l5 o[' the said reply dated 06.09.2022, respondents have specifically stated that without prejudice to any of the contentions raised in the said reply, considering the complexity of the issues on^har-rd and^{the nature of} disputes, respondents proposed Sri Justice^{NootyRamMohanI{ao,} Former Judge of Fligh Court of Andhra Pradesl.r^{as an arbitratorto} adjudicate the disputes between applicant^{atrd respondents.The} same is not acceptable to the applicant.^{'['l.resaid tact was inforrned} to the respondcnts by the^{applicantvidc lcgal noticcdatcd} t2.t0.2022.

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The aforesaid facts would reveal^{that therc arc arbitlable} disputes between applicant and respondcnts^{pursuant to thesaid} I-ease Deed dated 30.07.2006.^{llespondcnts cannot opposethis} applioation on the^ground that^{AssistantDirector, Enlorcement} Directorate passed an order dated^02.09.2021.

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The power of this Court under^{Section 11 (6) of the Act is} extremely limited as held by Hon'ble^{Apex Court in Vidya Drolia} anrl others vs. Durga Trading Corporatiottt.^{'t'his Court hasto see}

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whether, prima facie, an arbitration agreetnent exists.

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'Eozt)^{z scc t}

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In tight ol' the aforesaid discussion, this Arbitration

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Application is allowed. Dr. ,lustice Shtmeem Akther, Former

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Judge of this Courl is appointed as an arbitrator to adjudicate the

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disputes between applicant and respondenLs.

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Cor.rsequently, rnisccllaneous Petitions, pending if any, shall

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stand c losed.

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SD/. C.V.MALL^{IKARJUNAVARMA} JOINT v'^REGISTRAR

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//TRUE^COPY//

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SECTION^OFFICER

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To, 1 Dr. Justice^{Shameem Akther} '^{Former Judgeof High Court for the State of} Telanoana^{# Flat No or' sixin ii""'' r'r'i'l' Apa-rtment' Block - B ' H No} 8-2-26gl3l^F^{lF-6, Road No' )' ri'"pi' niirt' S.rinagarColonv'Hyderabad'}

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