IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF JANUARY, 2019 BEFORE HON’BLE MR.JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE CIVIL MISCELLANEOUS PETITION NO.160/2018 BETWEEN:
1.M NATARAJ S/O LATE M ESWARAIAH SETTY AGED ABOUT 58 YEARS 2.SMT. M N NISCHALA W/O SRI M NATARAJ AGED ABOUT 56 YEARS PETITIONER NOS.1 & 2 ARE R/AT NO.103, 2ND CROSS TATA SILK FARM BASAVANAGUDI BENGALURU-560 004 3.SRI M SREENATH GUPTA S/O LATE M ESWARAIAH SETTY AGED ABOUT 56 YEARS 4.SMT. UMA SRINATH W/O SRI M SREENATH GUPTA AGED ABOUT 48 YEARS PETITIONER NOS.3 & 4 ARE R/AT NO.11/1, D-STREET FORT KALASIPALYA BENGALURU-560 002 ... PETITIONERS (BY SRI NATARAJU T, ADV.,) AND SMT. TREJAVATHAMMA @ TEJAVATHAMMA W/O LATE M ESWARAIAH SETTY AGED ABOUT 73 YEARS R/AT NO.10/2, E-STREET FORT, KALASIPALYA BENGALURU-560 002 ... RESPONDENT (SERVED) THIS CMP IS FILED UNDER SECTION 11(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO APPOINT A SOLE ARBITRATOR TO RESOLVE THE DISPUTES BETWEEN THE PETITIONERS AND THE RESPONDENT AS PER CLAUSES 10 AND 12 OF THE JOINT VENTURE AGREEMENTS DATED 30.06.1991 AND 10.07.1997 (VIDE ANNEXURES-A & B).
THIS CMP COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER By way of this application under Section 11 of the Arbitration and Conciliation Act, 1996 (‘the Act of 1996’), the petitioners have made the request for appointment of Arbitrator to adjudicate upon and decide all their disputes with the respondent, arising out of, and relating to, two Joint Venture Agreements (JVAs) dated 30.06.1991 and 10.07.1997 (Annexures-A and B) respectively.
The petitioners, who are the sons and daughters-in-law of the respondent, entered into the aforesaid JVA dated 30.06.1991 for purchasing various properties by contributing their respective shares as also for constructing a multi- storeyed complex. Subsequently, on the demise of husband of the respondent, they got amended the said JVA on 10.07.1997. Thereafter, on the strength of the said JVAs, they filed a suit against the respondent in O.S.No.6774/2016 for partition and separate possession of the suit schedule properties.
The respondent entered appearance and filed an application under Section 8 of the Act of 1996 contending that the suit is not maintainable as the said JVAs contain Arbitration Clause Nos.10 and 12 respectively and, therefore, requested to refer the matter for arbitration.
However, on the basis of the joint memo filed by the parties, the Trial Court, by its order dated 10.01.2018, closed the matter with liberty to approach the Bengaluru Arbitration Centre.
When the petitioners approached the Bengaluru Arbitration Centre for appointment of Arbitrator, they were advised to obtain the consent of the respondent. In such circumstances, the petitioners got issued legal notice dated 16.03.2018 to the respondent requesting to intimate the time and date of her choice to appear before the Bengaluru Arbitration Centre, which was duly served. In spite of receipt of the said notice, the respondent did not reply nor made any efforts for appointment of Arbitrator.
The petitioners have stated their grievance in the manner that the respondent herself had filed the application under Section 8 of the Act of 1996 stating that there exist arbitration clauses and requested for referring the matter to arbitration. It is contended that on the basis of such statement of the respondent, the petitioners withdrew the suit; however, the respondent never made any efforts to enable the petitioners to initiate arbitration proceedings. It is also contended that the respondent having failed to appear before the Bengaluru Arbitration Centre for appointment of Arbitrator, this Court may appoint an independent Arbitrator to adjudicate upon the dispute between the parties.
Nobody has appeared for the respondent, though served.
Heard learned counsel for the petitioners and examined the record.
The limited aspect required to be considered in this application is as to whether there exists arbitration agreement between the parties?
In fact, the existence of arbitration agreement in this matter is apparent on the face of the record. The arbitration clause, which is same in both the JVAs (being Clause Nos.10 and 12 respectively), reads as under:
“In the event of any dispute arising out of this agreement/joint venture, such dispute shall be referred to an Arbitration approved by the members hereto and the decision of the said Arbitration shall be binding on all the members.”
From the material placed on record, it is evident that the petitioners issued notice proposing for appointment of Arbitrator, but the respondent did not take steps for appointment of Arbitrator as required by the aforesaid arbitration agreement between the parties.
When the parties stand at conflict and the disputes do exist, which have not been resolved; and for the reason of failure of the procedure for appointment of Arbitrator, it is just and proper that an independent arbitrator be appointed to adjudicate upon and decide the disputes between the parties, including their claims, counter-claims and objections.
Now, learned counsel for the petitioners has agreed to the appointment of Shri S.S.Nagarale, Retired District Judge, to act as an Arbitrator to resolve the disputes between the parties under the provisions of the Act of 1996, as per the Rules governing the Arbitration Centre at Bengaluru.
Accordingly, this petition is disposed of by appointing Shri S.S.Nagarale, Retired District Judge, to enter into the said reference and to act as an Arbitrator in the present case in the Arbitration Centre, Bengaluru, as per the Rules governing the said Arbitration Centre.
In the interest of justice, it is made clear that the Arbitrator shall adjudicate upon and decide all the disputes between the parties including their claims, counter-claims and objections relating to the agreements in question. The requirements of the Arbitration and Conciliation Act, 1996, [as amended by the Arbitration and Conciliation (Amendment) Act, 2015], shall be complied with by all the concerned.
Needless to observe that all the questions arising between the parties in this matter shall remain open for determination in the arbitration proceedings.
A copy of this order be sent to the Arbitration Centre, Khanija Bhavan, Bengaluru, for proceeding further in the matter on administrative side and also to Shri S.S.Nagarale, Retired District Judge, on the address available with the said Arbitration Centre, Bengaluru.
Sd/- CHIEF JUSTICE bkv