IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF JULY 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NOs.56188 OF 2018 & 4465 of 2019 (GM-RES) BETWEEN:
1. SMT. KANTHAMMA CHANDRASHEKAR W/O SRI.N.CHANDRASHEKAR, AGED ABOUT 56 YEARS R/AT NO.1146, 22ND CROSS, 23RD MAIN, II SECTOR, H.S.R. LAYOUT, BANGALORE-560 102.
2. SMT.H.R.RANI REDDY W/O LATE SRI.M.V.RAVIKUMAR AGED ABUOT 54 YEARS R/AT NO.1288, 32ND E CROSS, 26TH MAIN, 26TH MAIN, 4TH T BLOCK, JAYANAGAR, BANGALORE-560 041.
(BY MR.PADMANABHA V MALAE SR. ADV. A/W MR.AJAY RAO, ADV.) AND:
1. ROHAN HOUSING PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT PRADEEP CHAMBERS, NO.813 BHANDARKAR INSTIUTE ROAD, PUNE-411004 REP BY ITS DIRECTOR MR.SANJAY K LUNKAD … PETITIONERS 2. SRI.G.SREENIVASA REDDY S/O LATE SRI.GOVINDA REDDY, R/AT NO.90, MUNAKOLALA BUS STOP MUNAKOLALA, MARATHAHALLI, BANGALORE-560 037.
3. SRI.JAYAMMA W/O LATE SRI.H.RAMMAIAH REDDY AGED ABOUT 85 YEARS RESIDING AT NO.277/3 9TH ‘A’ MAIN, 2ND BLOCK JAYANAGAR BANGALORE – 560 011.
4. SRI.H.R.RAJASHEKAR S/O LATE SRI.H.RAMAIAH REDDY AGED ABOUT 58 YEARS RESIDING AT NO.310 6TH MAIN, HAL IIND STAGE BANGALORE – 560 038.
5. SMT.LAKSHMIDEVI W/O LATE VENKATASWAMY AGED ABOUT 64 YEARS RESIDING AT 003, CALDRA BLOCK ELLAN HOMES, KAIKONDARA HALLI SARJAPUR ROAD BANGALORE – 560 035.
6. SMT.SHAMALA RAJGOPAL W/O SRI.S.N.RAJGOPAL AGED ABOUT 52 YEARS RESIDING AT NO.24 MCLNTOSH ROAD EAST LACRESENT MN- 35947 UNITED STATES OF AMERICA.
(BY MR.K.G.RAGHAVAN SENIOR COUNSEL A/W MR.SURAJ GOVINDA RAJ, ADV.) … RESPONDENTS THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA, PRAYING TO SET ASIDE THE IMPUGNED ORDERDATED 25.09.2018 PASSED BY TE HXLIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BANGALORE CITY (CCH-R) ON IA NO.2/17 AND I.A.NO.5.17 IN A.S.61/15 (ANNEXURE-A) THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Mr.Padmanabha V. Mahale, learned Senior counsel for Mr.Ajay Rao, learned counsel for the petitioners.
Mr.K.G.Raghavan, Learned Senior Counsel along with Mr.Suraj Govinda Raj, learned counsel for caveator/respondent.
The writ petitions are admitted for hearing. With consent of the learned counsel for the parties, the same are heard finally.
2. In these petitions under Article 227 of the Constitution of India, the petitioners have assailed the validity of the order dated 25.09.2018 passed by Trial Court, by which application for amendment filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’ for short) has been rejected.
3. Facts giving rise to filing of these petitions briefly stated are that late H.Ramaiah Reddy, father of the petitioners had entered into a Joint Development Agreement with respondent No.1 on 25.08.2004 as well as on 01.11.2004. Thereafter, on 18.03.2006, aforementioned agreement was cancelled and two Joint Development Agreements were entered with respondent No.1. Under the aforesaid agreement, the respondent No.1 had to develop the schedule properties into multi storied apartment complex. However, it is the case of the petitioners that respondent No.1 failed to meet the obligations under the agreement. The dispute arose between the parties, which was referred to the arbitral tribunal as per terms and conditions of the agreement. The arbitral tribunal passed an award on 10.02.2015. Being aggrieved, the petitioners filed a petition under Section 34 of the Act. Thereafter, the petitioners filed an application seeking amendment of the petition filed by them under Section 34 of the Act. However, the aforesaid application was rejected by the Trial Court vide impugned order inter alia on the ground that the same has been filed beyond a period of 90 days and is barred by limitation. In the aforesaid factual background, the petitioners have approached this Court.
4. Learned Senior Counsel for the petitioners while inviting the attention of the court to the Notification dated 08.11.2017 issued by the Government of Karnataka submitted that 25 commercial courts have been constituted in various districts and therefore, in view of Section 15(3) of the Commercial Courts Act, 2015, the Trial Court has no jurisdiction to pass the impugned order and the matter ought to have been referred to the Commercial court. While pointing out to application for amendment, it is further submitted that the basic facts were already pleaded by the petitioners and the petitioners were only seeking to furnish material particulars and therefore, the finding recorded by the Trial Court that the proposed amendment is barred by limitation is perverse. In support of aforesaid submission, reference has been made to decision of the Supreme Court in ‘STATE OF MAHARASHTRA VS. HINDUSTAN CONSTRUCTION COMPANY LIMITED’, (2010)4 SCC 518.
5. On the other hand, Learned Senior Counsel for the respondent while inviting the attention of this court to Section 2(c) and Section 15 (3) of the Commercial Courts Act, 2015 submits that the dispute between the parties arises from a Joint Development Agreement executed between the parties and does not fall within the purview of commercial dispute. Therefore, the Trial Court had jurisdiction to deal with the application for amendment filed by the petitioners. It is further submitted that by way of amendment, the respondent was trying to incorporate altogether new pleas, which were barred by limitation and therefore, were rightly rejected by the Trial Court. In support of aforesaid submissions, reference has been made to decisions of Supreme Court in the cases of ‘UNION OF INDIA VS. POPULAR CONSTRUCTION CO.,’, AIR 2001 SC 4010, ‘VASTU INVEST AND HOLDINGS PVT LTD VS. GUJARAT LEASE FINANCING LTD.,’, 2001 (2) ARB. LR 315 (BOMBAY), ‘NINAN AND CO. VS. NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITED, 2000 (52) DRJ 385, ‘VENKATARAO A. PAI AND SONS LTD. VS. NARAYANLAL BANSILAL AND OTHRS’, AIR 1961 BOM 94, ‘ STATE OF MAHARASHTRA VS. HINDUSTAN CONSTRUCTION LTD.,’, AIR 2010 SC 1299, ‘ SUKANYA HOLDINGS PVT. LTD. VS. JYAESH PANDYA AND OTHERS’, 2003 VOL 105(3) BOM.
L.R. 147 (SC), ‘BHARATH BROADBAND NETWORK LTD VS. UNITED TELECOMS LIMITED’, AIR 2019 SC 2434 and ‘SIMPLEX INFRASTRUCTURE LIMITED VS. UNION OF INDIA’, (2019) 2 SCC 455.
6. I have considered the submissions made on both the sides and have perused the record. On perusal of the impugned order passed by the Trial Court, it is evident that the application for amendment of the petitioner under Section 34 of the Act has been rejected by the Trial Court on the ground that the same is barred by limitation as it has been filed beyond the period of 120 days. The scope in these writ petitions are confined to examining the validity of the order passed by the Trial Court. So far as submission made by Learned Senior Counsel for the petitioners that the impugned order is per se without jurisdiction is concerned as the matter ought to have been referred to the Commercial Courts in view of Section15(3) of the Commercial Courts Act, 2015 is concerned, it is pertinent to mention here that the aforesaid plea in the considered opinion of this court is a mixed question of law and fact. The petitioners have not brought to the notice of the Trial Court a copy of the order dated 08.11.2017, by which the commercial courts were designated. The nature of dispute between the parties, which arises from a Joint Development Agreements is required to be examined and a finding is required to be recorded whether the dispute between the parties falls within the purview of Section 2(c) of the Commercial Courts Act and is a commercial dispute. The aforesaid finding requires factual adjudication. Therefore, the issue raised in these writ petitions for the first time on behalf of the petitioners is not a pure question of law but is a mixed question of law and fact, which admittedly has not been raised before the Trial Court. Therefore, the same cannot be permitted to be raised for the first time in this writ petition and it is not necessary for this court to examine the same.
7. So far as submission made by Learned Senior Counsel for the petitioners that since the petitioners had already laid the factual foundation in the petition under Section 34 of the Act and was only seeking to incorporate the material facts is concerned, in this connection, reference may be made to para 3 of the petition, to which Learned Senior Counsel for the petitioners also referred, which reads as under:
3. The present application has been filed seeking setting aside of the majority award dated 10.02.2015 (“impugned award”) passed by defendant No.4 and accepted by defendant No.5 without independent reasoning, allowing defendant No.1’s claim by inter alia:
(a) declaring that Exhibits R-
12 and R-13 dated 12.12.2011 seeking to terminate two Joint Development Agreements dated 18.03.2006 at Exhibits C-14 and C-15 (hereinafter referred to as “JDA 1” and “JDA 2” respectively, and “JDAs” collectively) as invalid, ineffective and not binding on the claimant.
(b) directing the plaintiffs to specifically perform the two JDAs dated 18.03.2006 at Exhibits C-14 and C-15;
(c) declaring that the plaintiffs’ rights in Claim ‘B’ and ‘C’ schedule Properties are subject to defendant No.1’s rights under the two JDAs dated 18.03.2006 at Exhibits C-14 and C-15.
(d) directing the plaintiffs to execute Powers of Attorney in terms of Powers of Attorney dated 18.03.2006 at Exhibits C-20 and C- 21;
(e) restraining the plaintiffs by an order permanent injunction from in any manner alienating, encumbering or dealing with or changing the character of Claim ‘B’ and ‘C’ schedule properties; and By partly allowing the Plaintiff’s Counter Claim to hold that Defendant No.1 is liable to pay property tax in respect of Claim ‘B’ and ‘C’ Schedule Properties. It is submitted that the Presiding Arbitrator i.e., Defendant No.3 however vide his minority Award, rejected the claim of Defendant No.1 in toto and allowed the counter claim of the Plaintiffs. A true copy of the Award dated 10.02.2015 is produced herewith as Annexure-A.
At this stage, it is relevant to refer to the proposed amendments also:
18A. That in the last stage of the proceedings in the month of October 2014., there was a noticeable decline in the health condition of Defendant No.5. He looked physically weak and drowsy, unable to focus, lacking an incisive and alert mind and consequently not aware of the goings on before the Tribunal. He had to be helped into ad out of his seat and had to be assisted to and fro the chamber of Defendant No.3, being the venue of the arbitral tribunal at the commencement and the termination of the day’s proceedings.
18B. That earlier during the recording of the evidence of the witnesses of the Claimants and the respondents, defendant No.5 was unwell and absent from sitting of the Tribunal on as many as five occasions.
However, evidence was recorded in his absence with the consent of the parties. Defendant No.5 appeared physically weak and required assistance to get into and out of the vehicle of defendant No.4 with whom he traveled to and fro the arbitration venue.
18C. That it has now been reliably learnt that Defendant No.5 was seriously unwell and was undergoing treatment for intermittent loss of memory and confusion for a considerably long time. The loss of memory and confusion, as per our information was on account of the old age and fluctuations in sodium level of Defendant No.5.
18D. That in view of the state of health of defendant No.4 it is highly probable that he was not in full control of his mental faculties. It would not have been possible for him to have examined the voluminous material placed on record by the parties and to form an independent opinion on the merits of the case. Furthermore, it would not have been possible for him to grasp the controversy nor have the energy and commitment required to grasp the controversy nor have the energy and commitment required to resolve the case at hand. For this reason, he has simply, mechanically and in one sentence concurred with the Award of Defendant No.4.
18E. That it has been further reliably learnt that defendant No.5 had withdrawn from all arbitration proceedings before him on account of old age and health problem.
18F. That the plaintiffs were not aware of the incapacity of defendant No.5 at the time of Arbitration proceedings, nor was the same disclosed before the arbitral tribunal. Defendant No.5 ought to have expressed his inability to continue in view of his illness so as to avoid any miscarriage of justice between the parties.
18G. That legal competence of the Arbitrator is so fundamental to the rule of law and public policy that lack of such competence will vitiate the proceedings and hence would make the award so passed void, illegal and unenforceable and it is submitted that the impugned award is liable to be set aside on the above grounds alone as otherwise, it would resulting miscarriage of justice and severe prejudice and irreparable loss and injury would be caused to the plaintiffs.
8. Thus, it is evident that the aforesaid pleas, which have been taken for the first time in a proceeding under Section 34 of the Act, were well within the knowledge of the petitioners at the time when the proceedings were conducted by the arbitral tribunal. However, no reasons worth the name have been assigned by the petitioners in the application for not incorporating the pleas in the petition filed under Section 34 of the Act. In other words, the petitioners have completely failed to plead and prove due diligence on their part. In the fact situation of the case, the grounds which were not initially raised in the petition to challenge the award cannot be permitted to raised by way of an amendment as the grounds are independent grounds and are barred by limitation as the same are sought to be incorporated beyond the period of limitation of 120 days as prescribed in Proviso to Section 34(3) of the Act. The order passed by the Trial Court neither suffers from any jurisdictional infirmity nor any error apparent on the face of the record warranting interference of this Court in exercise of its power under Article 227 of the Constitution of India. Even otherwise it is well settled in law that the jurisdiction of this Court under Article 227 of the Constitution cannot be exercised to correct all errors of a judgment of a Court acting within its limitation. It can be exercised where the orders is passed in grave dereliction of duty or in flagrant abuse of fundamental principles of law and justice. [See: ‘JAI SINGH AND OTHERS VS. M.C.D. AND OTHERS’, (2010) 9 SCC 385, ‘SHALINI SHYAM SHETTY VS. RAJENDRA SHANKAR PATIL’, (2010) 8 SCC 329 and ‘RADHE SHYAM AND ANOTHER VS. CHABBI NATH AND OTHERS’, (2015) 5 SCC 423].
In the result, I do not find any merit in these petitions. The same fails and are hereby dismissed.
Sd/- JUDGE SS