IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF APRIL 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE Civil Misc. Petition No.252 of 2016 BETWEEN:
HOLIAC REALTY PRIVATE LIMITED, A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, HAVING ITS OFFICE AT ‘HUBTOWN PRIME’, NO.3/2, LEVEL 0, ANNASWAMY MUDALIAR ROAD, ULSOOR, BENGALURU-560 042, REPRESENTED BY ITS AUTHORIZED SIGNATORY, MR. HEMANT KUMAR GULATI (BY SRI. H. R. NARAYAN RAO, ADV. FOR SRI. RAJESHWARA.P.N, ADV.) AND:
1. SUNANDAMMA, AGED ABOUT 56 YEARS, W/O LATE B. V. SRINIVASACHAR, 2. C.S.KUSUMA, AGED ABOUT 38 YEARS, D/O LATE B.V.SRINIVASACHAR, 3. C.S.MURALIDHARA, AGED ABOUT 37 YEARS, S/O LATE B.V.SRINIVASACHAR, 4. C.S.VASANTHALAKSHMI, AGED ABOUT 34 YEARS, D/O LATE B.V.SRINIVASACHAR, …PETITIONER 5. C.S.SHILPA KALA, AGED ABOUT 32 YEARS, D/O LATE B.V.SRINIVASACHAR, 6. C.S.KESHAVA MURTHY, AGED ABOUT 31 YEARS, S/O.LATE B.V.SRINIVASACHAR, 7. SRI. SANJEEVAMURTHY, AGED ABOUT 57 YEARS, S/O LT.SRI.VENKATARAMANACHAR, RESPONDENTS 1 TO 7 ARE RESIDING AT: CHIKKABANAHALLI VILLAGE, BIDARA HOBLI, BANGALORE EAST TALUK, BANGALORE.
8. M/S. GEOWN PROPERTIES PVT. LTD., OFFICE AT NO.147, 18TH MAIN, 7TH CROSS, 1ST FLOOR, BTM 2ND STAGE, BANGALORE – 560 076.
REPRESENTED BY ITS DIRECTOR AND AUTHORIZED SIGNATORIES, MR.DHIRAJ KUMAR AND MR.MAHESH.
…RESPONDENTS (BY SRI.N.JAGADISH BALIGA, ADVOCATE FOR R8;
R1 AND R6 SERVICE OF HAND SUMMONS ARE ACCEPTED VIDE ORDER DATED 22.02.2019;
R2 TO R5 ARE DEEMED TO BE SERVED VIDE ORDER DATED 22.02.2019;
R7 - SERVED AND UNREPRESENTED) THIS CMP IS FILED UNDER SECTION 11(5) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO APPOINT AN ARBITRATOR ON THE PANEL OF ARBITRATION CENTRE – KARNATAKA (DOMESTIC & INTERNATIONAL), BENGALURU TO DECIDE THE DISPUTE THAT HAS ARISEN BETWEEN THE PETITIONER AND THE RESPONDENTS PURSUANT TO THE BREACH OF THE TERMS AND CONDITIONS OF AGREEMENT DATED 02.06.2014 AS PER ANNEXURE–C AND PASS SUCH OTHER ORDER OR ORDERS AS THIS HON’BLE COURT DEEMS FIT, IN THE CIRCUMSTANCES OF THE CASE, IN THE INTEREST OF JUSTICE AND EQUITY.
THIS CMP COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R Sri. H. R. Narayan Rao, learned counsel for the petitioner.
Sri. N. Jagadish Baliga, learned counsel for the respondent No.8.
2. Petition is admitted for hearing. With consent of the parties, same is heard finally.
3. In this petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for brevity), the petitioner seeks appointment of an arbitrator.
4. Facts giving rise to filing of this petition briefly stated are that the petitioner is engaged in the business of construction and development of real estate. One B. V. Srinivasachar and respondent No.7 were the owners of immovable property comprised in 33 guntas of Sy.No.25/1. The aforesaid late B. V. Srinivasachar and respondent No.7 entered into joint development agreement on 22.09.2012. Late B. V. Srinivasachar and respondent No.7 also executed general power of attorney dated 22.09.2012 in favour of respondent No.8 authorizing him to carry out certain acts in respect of the schedule property. The petitioner, late B. V. Srinivasachar and respondent Nos.7 and 8 entered into written agreement on 02.06.2014 for development of the property in question. The dispute having arisen between the parties, the petitioner sent notice on 17.05.2016 and invoked the arbitration clause. Thereafter this petition has been filed.
5. When the matter was taken up today, learned counsel for respondent No.8 has raised an objection with regard to maintainability of the petition on the ground that the agreement in question dated 02.06.2014 is not duly stamped and therefore until and unless the aforesaid document is duly stamped, no action for appointing an arbitrator under Section 11 of the Act can be taken. In support of the aforesaid submission, learned counsel for the respondent has placed reliance on the decision of the Supreme Court in ‘Garware Wall Ropes Limited vs. Coastal Marine Constructions & Engineering Limited’ in Civil Appeal NO.3631/2019 DATED 10.04.2019, wherein it has been held that on the basis of unstamped agreement, the Court dealing with the application under Section 11 of the Act cannot appoint an arbitrator.
6. On the other hand, learned counsel for the petitioner has submitted that the agreement in question pertains to sharing of the work between the parties and the agreement is not a contract and therefore the agreement is not required to be stamped under the provisions of the Karnataka Stamp Act, 1957 (hereinafter referred to as ‘the Stamp Act’ for brevity). It is further submitted that while dealing with the petition under Section 11 of the Act, the Court must consider the nature of the agreement to find out about the issue with regard to levy of stamp duty. In support of the aforesaid submission, learned counsel for the petitioner has placed reliance on the decisions of Hon’ble Supreme Court in ‘Duro Felguera S. A. vs. Gangavaram Port Limited’, (2017) 9 SCC 729 and ‘Black Pearl Hotels Private Limtied vs. Planet M. Retail Limited’, (2017) 4 SCC 498.
7. I have considered the submission made by the learned counsel for the parties and perused the record. From the close scrutiny of the agreement dated 02.06.2014, it is evident that the aforesaid agreement is a development agreement, which is evident from the relevant extract of the agreement which reads as under:
THE TERMS OF DEVELOPMENT: The THIRD PARTY shall be entitled to develop the schedule property on terms contained in JDA subject to the following modifications:
(i) The sharing ratio of the land and the built up area shall be as below:
(ii) All statutory deposits/charges to be paid to the Bangalore Water Supply and Sewerage Board (BWSSB), Bangalore Electricity Supply Company (BESCOM), Bangalore Development Authority (BDA). Sales Tax/Works contract tax/Service tax/VAT, income tax or any statutory due etc., any Cess or levy or charge made by the BDA Infrastructure Cess, Cauvery Water Schemes etc. shall be borne by the parties in proportion of their entitlement of built up area. The deposit payable for Bangalore Water Supply and Sewerage Board (BWSSB), Bangalore Electricity Supply Company (BESCOM) connection shall be Rs.150/- per sq.ft. or as per actual whichever is higher.
(iii) In case of FAR available being less than 2.25 the area entitlement of the First and Second parties shall reduce proportionately, without in any manner impacting the entitlement of the Third Party.
(iv) All timelines specified under the JDA shall stand extended and commence from the execution of deed/s/documents contemplated herein.
8. Article 5(f) of the Stamp Act provides levy of stamp duty on an agreement which pertains to construction or development of any immovable property. The agreement in question falls within the purview of Article 5(f) of the Stamp Act and therefore the stamp duty on the agreement is leviable as prescribed under the Stamp Act. It is not in dispute that the agreement in question is not stamped as per Article 5(f) of the Stamp Act. Therefore, in view of the law laid down by the Supreme Court in ‘SMS Tea Estates Private Limited vs. Chandmari Tea Company Private Limited’, (2011) 14 SCC 66, as well as decision of the Supreme Court in Garware Wall Ropes Limited (supra), since the agreement in question is not duly stamped, therefore no action for appointment of an arbitrator can be taken.
9. However, the petition is disposed of with liberty to the petitioner to take action for impounding of the agreement in question and thereafter to take action in accordance with law with regard to redressal of his grievance for appointment of an arbitrator.
10. With the aforesaid liberty, petition is disposed of.
Sd/- JUDGE RD