IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF NOVEMBER, 2019 BEFORE THE HON' BLE MR. JUSTICE S.G. PANDIT CRP.No.428/2019 A/W CRP No.439/2019 CRP.No.428/2019 BETWEEN:
ADARSH PALM RETREAT CONDOMINIUMS PHASE 3 OWNERS ASSOCIATION AN ASSOCIATION REGISTERED UNDER THE KARNATAKA APARTMENT OWNERSHIP ACT 1972 CLUB HOUSE BLOCK ADARSH PALM RETREAT CONDOMINIUMS PHASE 3 DEVARABISANAHALLI BELLANDUR BANGALORE-560 103 REP. BY ITS PRESIDENT.
(BY SRI.IAN LEWIS, ADV.) AND:
1. ANIL SHARMA SON OF D R SHARMA AGED 51 YEARS A-101, TOWER-4 ADARSH PALM RETREAT ...PETITIONER CONDOMINIUMS DEVARABISANAHALLI BANGALORE-560103.
2. RAJESH PATRO SON OF DEVENDRA PATRO AGED 45 YEARS F-004, TOWER-4 ADARSH PALM RETREAT CONDOMINIUMS DEVARABISANAHALLI BANGALORE-560 103.
3. R. MURLIDHARA REDDY SON OF V RANGA REDDY AGED 53 YEARS LOTUS 303 ADARSH PALM RETREAT CONDOMINIUMS DEVARABISANAHALLI BANGALORE-560 103.
4. ADARSH DEVELOPERS A PARTNERSHIP FIRM NO.10, VITTAL MALLYA ROAD BANGALORE-560001 REPRESENTED BY ITS PARTNERS B M JAYESHANAKAR MANAGING PARTNER B M KARUNESH –PARTNER.
…RESPONDENTS (BY SRI.R MADHUSUDHAN REDDY, ADV. FOR R1 TO 3 SRI V.B. SHIVAKUMAR, ADV. FOR R4) THIS CIVIL REVISION PETITION IS FILED UNDER SECTION 115 OF THE CODE OF CIVIL PROCEDURE, 1908, AGAINST THE ORDER DATED 04.09.2019 PASSED ON I.A. NO.6 IN OS NO.4839/2019 ON THE FILE OF THE XXXIV ADDL. CITY CIVIL JUDGE AND SESSIONS JUDGE, BENGALURU REJECTING THE I.A.NO.VI FILED UNDER SECTION 8 OF THE ARBITRATION AND CONCILIATION ACT.
CRP No.439/2019 BETWEEN:
M/S. ADARSH DEVELOPERS A REGISTERED PARTNERSHIP FIRM REP. BY ITS PARTNERS B M JAYESHANKAR MANAGING PARTNER B M KARUNESH –PARTNER. NO.10, VITTAL MALLYA ROAD BANGALORE-560001.
...PETITIONER (BY SRI.V.B.SHIVAKUMAR, ADV.) AND:
1. SRI ANIL SHARMA AGED ABOUT 51 YEARS SON OF D R SHARMA A-101, TOWER-4 ADARSH PALM RETREAT CONDOMINIUMS OUTER RING ROAD DEVARABEESANA HALLI BENGALURU-560103.
2. CAPTAIN RAJESH PATRO AGED ABOUT 45 YEARS SON OF DEVENDRA PATRO F-004, TOWER-4 ADARSH PALM RETREAT CONDOMINIUMS BANGALORE-560 103.
3. SRI. R. MURLIDHARA REDDY AGED ABOUT 53 YEARS SON OF LATE V RANGA REDDY LOTUS -303 ADARSH PALM RETREAT CONDOMINIUMS BANGALORE-560 103.
4. M/S. ADARSH PALM RETREAT CONDOMINIUMS APARTMENT OWNERS ASSOCIATION ADARSH PALM RETREAT OUTER RING ROAD BENGALURU-560 103 REP. BY ITS PRESIDENT MR. ALOKANANDA SENGUPTA.
…RESPONDENTS (BY SRI.R MADHUSUDHAN REDDY, ADV. FOR R1 TO 3 SRI IAN LEWIS, ADV. FOR R4) THIS CIVIL REVISION PETITION IS FILED UNDER SECTION 115 OF THE CODE OF CIVIL PROCEDURE, 1908, AGAINST THE ORDER DATED 04.09.2019 PASSED ON I.A. NO.V AND VI IN OS NO.4839/2019 ON THE FILE OF THE XXXIV ADDL. CITY CIVIL AND SESSIONS JUDGE, BENGALURU REJECTING THE I.A.NO.V AND VI FILED UNDER SECTION 8 OF THE ARBITRATION AND CONCILIATION ACT.
THESE CIVIL REVISION PETITIONS COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER These two revision petitions are directed against the order dated 04.09.2019 passed in O.S.No.4839/2019 on the file of the 34th Additional City Civil and Sessions Judge, Bengaluru, by which, the applications filed by defendants No.1 and 2 under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for short) is rejected.
2. The petitioners in both the revision petitions are defendants in O.S.No.4839/2019 whereas the respondents in both the revision petitions are plaintiffs in the said suit. The said suit is filed for multiple reliefs including the relief of a decree of mandatory injunction directing the defendants to keep the schedule property as Parks, Open Spaces and road and not to change its nature. They have also sought for permanent injunction directing the second defendant not to damage tree sapplings planted in the parks and open spaces of the schedule property and protect the same. The plaintiffs have sought reliefs against the second defendant-Association.
3. Plaintiffs also stated that they are the members of second defendant/Association. The plaintiffs are Apartment Owners. It is alleged that the second defendant/Association instead of protecting the natural flora that is being grown in the schedule property is illegally damaging the flora mercilessly. The second defendant/Association is committing acts in detrimental to the welfare of the residents and the owners of the Project and in violation of the law laid down in the Karnataka Parks, Play-Fields and Open Spaces (Preservation and Regulation) Act, 1985.
4. On issuance of suit summons, the defendants appeared and filed I.A.Nos.4 and 5 under Section 8 of the Arbitration and Conciliation Act praying to refer the case for Arbitration. It is the contention of the defendants that the Deed of Declaration, to which the plaintiffs are parties, contains arbitration clause. As such, the suit would not be maintainable and the dispute is to be referred to arbitration. The said application was opposed by the plaintiffs contending that the suit schedule property is already relinquished in favour of the Bruhat Bengaluru Mahanagara Palike (‘BBMP’ for short) and as such, the suit schedule property would not fall within the ambit of Arbitration clause and the subject matter is outside the purview of the arbitration clause contained in the Deed of Declaration. The Tribunal, under the impugned order rejected the applications filed by the defendants under Section 8 of the Act. Aggrieved by the rejection of the applications both the defendants are before this Court in these two revision petitions.
5. Heard the learned counsel for the petitioners and learned counsel for the respondents in both the revision petitions.
6. Learned counsel for the petitioners would submit that the trial Court committed material irregularity in rejecting the applications filed by the defendants under Section 8 of the Act. It is their submission that the plaintiffs are members of the second defendant/ Association and they are bound by the clauses of Deed of Declaration and also bye-laws of Adarsh Palm Retreat Condominiums Phase 3 Owners Association (for short ‘the Association’). Learned counsel submits that clause 50 of the Deed of Declaration provides for arbitration of any dispute between the Association and its members with regard to any of the rights and obligations as per the bye-laws and regulations. It is his submission that the prayers sought in the plaint against the defendants would squarely fall within the Arbitration clause and the matter requires to be referred to Arbitration.
7. Per contra, learned counsel for the plaintiffs/ respondents herein submits that the suit is filed under Order I Rule 8 of CPC and as such Arbitration clause would not apply. It is their further submission that the first defendant is not a member of the Association. Hence, the arbitration clause would not apply to the reliefs sought in the suit. Further, it is their contention that the subject matter or the suit schedule property is already handed over to the BBMP by relinquishing the rights of Open Spaces, Parks and Roads. Thus, he submits that the subject matter is not within the ambit of the Arbitration clause. Thus, prays for dismissal of the revision petitions.
8. On hearing the learned counsel for the parties and on perusal of the material on record, the only question which falls for consideration in these two revision petitions is as to whether the trial Court is justified in rejecting the applications filed under Section 8 of the Act.
9. Answer to the above point would be in the negative for the following reasons:
Admittedly, the plaintiffs are owners of the apartments at Adarsh Palm Retreat Condominiums Phase-3 and they are also members of the second defendant-Association. The reliefs sought against the defendants are mandatory injunction directing the defendants to keep the schedule property as Parks, Open Spaces and Road and not to change its nature. Among other prayers, the plaintiffs have sought for declaring the formation of Special Interest Group by the second defendant/Association as null and void; declare that the Special General Body Meeting held on 29.06.2019 is null and void as the same does not comply with the Bye-laws of the Association. Several other reliefs are also sought against the second defendant.
10. Clause 50 of Adarsh Palm Retreat Condominiums Phase 3 Owners’ Association General Rules and Regulations reads as follows:
“50. In the event of any dispute between the Association and its members with regard to any of the right and obligations as per these bye-laws and regulations, the same shall be resolved by referring the dispute for arbitration as per the provisions of the Arbitration and Conciliation Act, 1996 as amended from time to time”.
The above clause which is arbitration clause provides for resolution of any dispute between the Association and its members with regard to any rights and obligations as per the Bye-laws and Regulations by referring the dispute for arbitration.
11. Section 8 of the Arbitration and Conciliation Act reads as follows:
“8. Power to refer parties to arbitration where there is an arbitration agreement:-
(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.
(2) The application referred to in sub- section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:
Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.”
A reading of the above provision would indicate that where an action is brought in a matter which is the subject matter of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the dispute, then notwithstanding any judgment, decree or order of the Hon'ble Supreme Court or any Court, refer the parties to the arbitration when there is valid arbitration agreement exists.
13. In the instant case, the plaintiffs are members of the second defendant-Association and they are seeking certain prayers against the second defendant/ Association. Clause 50 of Adarsh Palm Retreat Condominiums Phase 3 Owners’ Association General Rules and Regulations provides for arbitration for resolution of any dispute between the Association and its members. In that circumstance, the trial Court ought to have examined as to whether the disputes raised by the plaintiffs can be the subject matter of arbitration or not?
The trial Court, without examining as to whether the disputes raised by the plaintiffs fall within the ambit of arbitration as provided under Clause 50 of the Arbitration Agreement rejected the applications, by a cryptic order. The trial Court has failed to consider the applications with reference to the reliefs sought by the plaintiffs against defendant-Association based on the documents produced by the parties.
14. The Hon'ble Apex Court in a recent decision reported in AIR 2019 SC 3785 in the case of ZENITH DRUGS AND ALLIED AGENCIES PVT. LTD., REPRESENTED BY ITS MANAGING DIRECTOR, SHRI UDAY KRISHNA PAUL v/s M/S. NICHOLAS PIRAMAL INDIA LTD., at paragraph 14 has held as follows:
14. The parties can be referred to arbitration in an application filed under Section 8 of the Act only if the subject matter of the action before the judicial authority relates to dispute which is the subject matter of the arbitration agreement. As per Section 8 of the Act, the following conditions have to be satisfied for referring the parties to arbitration:-
(i) there is an arbitration agreement;
(ii) a party to the agreement brings an action in the court against the other party;
(iii) subject-matter of the action is the same as the subject-matter of the arbitration agreement;
(iv) the opposite party applies to the judicial authority for referring the parties to arbitration before it submits his first statement on the substance of the dispute.
An application under Section 8 of the Act can be made only if the subject matter of the suit is also the same as the subject matter of arbitration. In other words, only those disputes which are specifically agreed to be resolved through arbitration can be the subject matter of arbitration; and upon satisfaction of the same, the Court can refer the parties to arbitration.
15. The above decision makes it clear that if the subject matter of the suit is the same as subject matter of arbitration, those subject matters could be resolved through arbitration. While referring the subject matter to arbitration, the Court shall satisfy itself as to whether subject matter falls within those disputes which could be referred to arbitration. Following the decision of the Hon'ble Apex Court in the aforesaid judgment, the revision petitions are allowed and remanded to the trial Court. The impugned order dated 04.09.2019 passed in O.S.No.4839/2019 on the file of the 34th Additional City Civil and Sessions Judge, Bengaluru is set aside and the applications are remitted to the trial Court for fresh consideration. The trial Court to examine specifically as to whether the subject matter of the suit are those disputes which are specially agreed to be resolved through arbitration, with reference to the arbitration clause and materials on record.
It is submitted by both the parties that there are other applications pending consideration such as the application filed under Order I Rule 8 of CPC and another application filed under Order I Rule 10 for impleading. The trial Court is directed to dispose of all the applications in accordance with law.
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