IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF AUGUST, 2019 BEFORE THE HON’BLE MR. JUSTICE B. VEERAPPA C.M.P. No.368/2018 BETWEEN M/S. SATINSTEPS DEVELOPERS A REGISTERED PARTNERSHIP FIRM HAVING ITS OFFICE AT FLAT NO.301 S-13, “BLOSSOM SILVER SPRING” SPICE GARDEN COMPOUND, K.HALLI MARATHAHALLI BENGALURU-560 037 REPRESENTED BY ITS PARTNER MR. M.SYAM SUNDER ... PETITIONER (BY CAPT.ARAVIND SHARMA, ADVOCATE FOR SRI NATARAJ R, ADVOCATE) AND MR. K. V. RAMACHANDRA REDDY, AGED ABOUT 68 YEARS S/O V.VENKATARAMANAPPA R/A NO.49/1, MUTHUSANDRA ROAD VARTHUR VILLAGE (OPPOSITE WATER TANK) BANGALORE EAST TALUK-560 087 ... RESPONDENT (BY SRI VIVEK.B.N, ADVOCATE FOR SRI ABHINAV.R, ADVOCATE) THIS CMP IS FILED UNDER SECTION 11(5) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO APPOINT AN ARBITRATOR ON THE PANEL OF ARBITRATOR AT THE BENGALURU ARBITRATION CENTER TO ADJUDICATE THE DISPUTE BETWEEN THE PETITIONER AND RESPONDENT ARISING OUT OF THE JOINT DEVELOPMENT AGREEMENT DATED:31/03/2016 IN ANNEXURE-C.
THIS CMP COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R The petitioner has filed the present Civil Miscellaneous Petition under the provisions of Section 11(5) of the Arbitration and Conciliation Act to appoint a sole Arbitrator to adjudicate the dispute in terms of Clause 21 of the Agreement dated 31.3.2016 Annexure-C entered into between the parties.
2. It is the case of the petitioner that it is a registered partnership firm and Mr. M. Syam Sunder being one of the partners of the firm has signed the present petitioner and the respondent being the absolute owner of the property bearing Sy.No.76/1, measuring 37 guntas situated at Varthur Village, Varthur Hobli, Bangalore East Taluk intended to develop the said property into multistoried residential complex and towards accomplishment of his desire, he approached the petitioner. After negotiations, both the parties entered into a joint Development Agreement on 31.3.2016 and the respondent executed General Power of Attorney which was registered on the same day in favour of the petitioner, certified copies of which are marked as Annexures-C and D.
3. It is the further case of the petitioner that he has paid a sum of Rs.53 lakhs as refundable deposit even before execution of the Joint Development Agreement. Both the parties had agreed that on completion of the project, petitioner would be entitled to 42.5% of the super built up area and respondent would be entitled to 57.5%. The respondent who was in possession of the subject land undertook to deliver possession of the same to the petitioner and further undertook to pay the betterment charge and has made the katha in his name. The petitioner had paid a sum of Rs.10 lakhs on 28.4.2016 and apart from that, the petitioner also paid a sum of Rs.14 lakhs on 21.3.2016 and in all it had paid a total sum of Rs.77 lakhs. In addition, the petitioner had also paid a sum of 9,36,500/- towards betterment charges as the respondent had failed to pay the same. Thereafter, the petitioner started the process of development by preparing the plan, etc., and applied for sanction of plan and license and paid taxes towards the subject property.
4. It is the further case of the petitioner that the respondent though being aware of various activities performed by it in terms of the Joint Development Agreement, has failed to deliver possession of the subject property and did not allow it to put up the compound wall enclosing the subject property. Therefore, the petitioner by the letter dated 11.5.2007 called upon the respondent to perform his obligations. After receipt of the said letter, a notice came to be issued terminating the Joint Development Agreement and General Power of Attorney unilaterally by the respondent to which the petitioner sent a reply on 28.7.2017 calling upon the respondent to submit himself to arbitration and suggested the name of the nominee for Arbitrator. The respondent though served with the notice on 28.7.2017 failed to reply to the same. Therefore, the petitioner is before this Court for the relief sought for.
5. The respondent has not filed any objections to the main civil miscellaneous petition.
6. I have heard the learned Counsel for the parties to the lis.
7. Captain Aravind Sharma for Sri Nataraj. R., learned Counsel for the petitioner reiterating the averments made in the petition contended that it is not in dispute that the respondent is the owner of the property in question. He also submitted that both the parties have entered into a registered Joint Development Agreement on 31.3.2016 and the respondent has also executed the registered General Power of Attorney in favour of the petitioner and the petitioner has paid a sum of Rs.77,00,000/- plus Rs.9,36,500/- towards betterment charges but the respondent failed to perform part of terms and conditions of the contract. Inspite of notice and letters, respondent has not at all replied. He would further contend that when there exists an arbitration clause -21 in the registered Joint Development Agreement, and the petitioner has complied with the provisions of Section 7(5) of the Act and hence there is no impediment for this Court to appoint the Sole Arbitrator. Therefore, he sought to allow the civil miscellaneous petition.
8. Per contra, Sri B.N. Vivek for Sri Abinav R., learned Counsel for the respondent sought to justify the action of the respondent owner and contended that it is the petitioner, who has failed to perform his part in terms of the Joint Development Agreement and therefore, he sought to dismiss the civil miscellaneous petition.
9. Having heard the learned Counsel for the parties, it is an undisputed fact that the respondent is the owner of the property in question and on approach by the respondent to the petitioner, the parties have entered into registered Joint Development Agreement on 31.3.2016 and on the same day, the respondent executed General Power of Attorney in favour of the petitioner. It is also not in dispute that in pursuance of the said Joint Development Agreement and General Power of Attorney, the petitioner has paid a sum of Rs.77,00,000/- and a sum of Rs.9,36,500/- towards betterment charges. It is the specific case of the petitioner that inspite of the petitioner calling upon the respondent to perform his part of the contract, the respondent unilaterally has terminated the Joint Development Agreement on 3.7.2017. Therefore, the petitioner issued the legal notice to the respondent to which the respondent has not replied.
10. It is to be noted that the respondent has neither disputed the registered Joint Development Agreement nor Clause 21 of the said agreement which reads as under:
“21. Dispute Resolution:
21.1 It is hereby agreed by the parties herein that all disputes and differences arising out of, in relation to these presents or touching the development, construction of new buildings and in relation thereto shall be referred to arbitration 21.2 The Arbitration shall be conducted as follows:
All proceedings in any arbitration process shall be conducted in English language;
i) The dispute shall be referred to a panel of three arbitrators –the First Party shall appoint one arbitrator and the Second Party shall appoint one Arbitrator and the third being appointed by the two arbitrators nominated by the parties herein;
ii) The arbitration award shall be final and binding on the parties and the parties agree to be bound thereby and to act accordingly;
iii) The arbitral tribunal may, by unanimous agreement, award to a party that substantially prevails on the merits, its costs and reasonable expenses (including reasonable fees of its counsel);
iv) The seat of such Arbitration tribunal shall be at Bangalore; and v) The Arbitration Proceedings shall be governed by the Arbitration and Conciliation Act, 1996”
11. It is not in dispute that the petitioner has complied with the provisions of Section 7(5) of the Act by issuing legal notice and therefore, there is no impediment for appointment of Sole Arbitrator.
12. Though the Arbitration Clause stipulates constitution of Arbitral Tribunal consisting of three Members, learned Counsel for both parties fairly submit that Sole Arbitrator be appointed for adjudication of dispute between them. The said fair submission is placed on record.
13. In view of the above, Civil Miscellaneous Petition is allowed. With consent of learned Counsel for both parties, Hon’ble Sri Justice Jayant Patel, Former Judge of this Court is appointed as Sole Arbitrator to adjudicate the dispute between the parties in terms of Clause 21 of the registered Joint Development Agreement dated 31.3.2016.
14. Registry is directed to send a copy of this order to the learned Arbitrator –Hon’ble Mr. Justice Jayant Patel Former Judge of this Court, as well as Arbitration Centre forthwith for reference.
Sd/-
JUDGE Nsu/-