IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF OCTOBER 2019 BEFORE THE HON'BLE Mr. JUSTICE B.VEERAPPA CIVIL MISCELLANEOUS PETITION No.323/2018 BETWEEN M/S. SJR ENTERPRISES, A PROPRIETARY CONCERN, HAVING ITS OFFICE AT 3RD FLOOR, BALAVANA, PLOT No.61, 5TH ‘A’ BLOCK, KORAMANGALA, BENGALURU-560 095.
REPRESENTED BY ITS PROPRIETOR: MR. J. BOOPESH REDDY.
.... PETITIONER (BY SRI AJAY SHANKAR, ADVOCATE) (PETITIONER’S NAME AMENDED VIDE COURT ORDER DATED 15.02.2019) AND:
1. MR. T. SRINIVAS, AGED ABOUT 60 YEARS, SON OF LATE SRI A. THIMMAIAH REDDY, RESIDING AT:
No.178, SURANJAN DAS ROAD, HAL 3RD STAGE, BENGALURU-560 075.
2. MR. T. ANAND, AGED ABOUT 56 YEARS, SON OF LATE SRI A. THIMMAIAH REDDY, RESIDING AT:
No.178, SURANJAN DAS ROAD, HAL 3RD STAGE, BENGALURU-560 075.
…RESPONDENTS (BY SRI CHETAN DESAI, ADVOCATE FOR SRI KRISHNA NAIK, ADVOCATE FOR RESPONDENT NOs.1 AND 2) THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER SECTION 11(4) OF THE ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO APPOINT AN ARBITRATOR ON BEHALF OF THE RESPONDENTS IN TERMS OF CLAUSE 26.4 OF THE JOINT DEVELOPMENT AGREEMENT DATED 09.09.2010 VIDE ANNEXURE ‘A’ SO AS TO ARBITRATE THE DISPUTES RAISED BY THE PETITIONER AGAINST THE RESPONDENTS IN RESPECT OF PAYMENTS OUTSTANDING TO THE PETITIONER FROM THE RESPONDENTS UNDER THE JOINT DEVELOPMENT AGREEMENT DATED 09.09.2010 AND ETC.
THIS CIVIL MISCELLANEOUS PETITION COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R The petitioner filed the present Civil Miscellaneous Petition under the provisions of Section 11(4) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as ‘the Act’, for brevity) for appointment of sole Arbitrator to adjudicate the dispute in terms of clause No.26.4 of the Joint Development Agreement dated 09.09.2010 entered into between the parties.
2. It is the case of the petitioner that the respondents were the absolute owners of the converted properties bearing Sy. No.81/1 measuring 03 Acres 02 guntas and Sy. No.83/2 measuring 01 Acre 34 guntas, totally measuring 04 Acres 36 guntas, both situate at Doddanekkundi village, K.R. Puram hobli, Bengaluru South Taluk (now Bengaluru East Taluk). The petitioner is in the business of developing infrastructure and he has built some of the most prominent living and retail properties in the heart of Bengaluru. The respondents with a desire to develop the schedule properties by constructing multi-storied residential apartments thereon, and personally knowing the petitioner through various social circles and knowing the petitioner’s good reputation, entered into a registered Joint Development Agreement dated 09.09.2010 with the petitioner for developing the schedule properties by constructing multi-storied residential apartments.
3. In terms of clause No. 7 of the Joint Development Agreement, it was agreed that the petitioner would develop the schedule properties by constructing multi-storied residential apartments in terms of the sanctioned plan issued by the Bruhat Bengaluru Mahanagara Palike (BBMP) and deliver 1,40,599 Square Feet of super built-up area in the form of residential apartments, that were identified in the Joint Development Agreement, with one car parking space for each apartment to the respondents and that in consideration thereof, the petitioner was entitled to 3,36,545 Square Feet in the form of residential apartments that were identified in the Joint Development Agreement with balance car parking, terrace area and proportionate share in the common areas and undivided interest in the schedule properties. It is further contended that in terms of clause No. 9.2 of the Joint Development Agreement, the petitioner made payment of Rs.1,20,00,000/- as an interest free refundable deposit to the respondents, which was acknowledged by the respondents as stated in the said Joint Development Agreement. It was further agreed that the said interest free refundable deposit was to be refunded to the petitioner upon the delivery of the owners’ constructed area. It was specifically agreed in terms of clause No. 9.3 of the Joint Development Agreement that in the event of any delay or default in refund of the refundable deposit by the respondents, the petitioner is entitled to have a lien over three apartments, namely, L-303, M-203 and N-404 that falls to the respondents’ share in owners’ constructed area till such repayment. It was further agreed that in the event of non-payment / delay in refunding the interest free refundable deposit, the petitioner would also further have first charge on the aforesaid apartments until refund of the refundable deposit. It was further agreed between the parties that the cost of procuring connections from BESCOM, BWSSB, any other Government or statutory deposits, other outgoings, Value Added Tax and Service Tax was to be shared between both the parties to the Joint Development Agreement.
4. It is the further case of the petitioner that after construction of the apartments, it has handed over the possession of the owners’ constructed area to the respondents. Thereafter, as per the terms of the Joint Development Agreement, the petitioner requested the respondents to refund the interest free refundable deposit of Rs.1,20,00,000/- along with Rs.2,60,73,162/- towards the respondents’ share of the common expenses as mentioned in the Joint Development Agreement. In spite of the request made, the respondents have not repaid the said amount. Therefore, the petitioner issued legal notice dated 06.09.2018 to the respondents. Since the respondents have not replied, the petitioner is before this Court for the appointment of Arbitrator as sought for.
5. The respondents have not filed objections.
6. I have heard the learned counsel for the parties to the lis.
7. Sri Ajay Shankar, learned counsel for the petitioner, reiterating the averments made in the Civil Miscellaneous Petition contended that there is no dispute between the parties with regard to the registered Joint Development Agreement entered into between the parties on 09.09.2010. In terms of clause Nos. 9.2 and 9.3 of the Joint Development Agreement after completion of construction of apartments and delivery of respondents’ share by the petitioner, respondents are liable to refund the interest free refundable deposit of Rs.1,20,00,000/- to the petitioner. In spite of the petitioner handing over possession of the owners’ constructed area to the respondents, they have not refunded the said amount to the petitioner in terms of clause No.9.3 of the Joint Development Agreement. The petitioner has complied with the provisions of Section 11(5) of the Act by issuing legal notice dated 06.09.2018 to the respondents. He also contended that there is no dispute with regard to the existence of arbitration clause for resolution of any dispute between the parties in terms of clause No.26.4 of the Joint Development Agreement. Therefore, he sought to allow the Civil Miscellaneous Petition.
8. Per contra, learned counsel for the respondents, Sri Chetan Desai, disputed the averments made in the Civil Miscellaneous Petition and contended that it is the petitioner who violated the terms and conditions of the Joint Development Agreement and not the respondents. Therefore, he sought to dismiss the Civil Miscellaneous Petition.
9. Having heard the learned counsel for the parties, it is an undisputed fact that both the petitioner and respondents have entered into registered Joint Development Agreement on 09.09.2010 for the purpose of construction of residential apartments. It is the case of the petitioner that it has completed the construction of apartments and handed over owners’ constructed area to the respondents. In spite of repeated requests made for refund of the interest free refundable deposit of Rs.1,20,00,000/-, the same was not refunded by the respondents in terms of clause No. 9.2 of the Joint Development Agreement. It is further contended that in terms of clause No. 9.3 of the Joint Development Agreement, in the event of delay in refunding the said amount, the petitioner is entitled to have lien over three apartments, which are mentioned in the Joint Development Agreement, in the owners constructed area till repayment of the security deposit to the petitioner. It is further contended that in spite of repeated requests, the respondents have not refunded the said deposit to the petitioner. Though legal notice was issued by the petitioner on 06.09.2018, respondents have neither replied to the said notice nor filed objections denying the averments made in the present Civil Miscellaneous Petition. Though the learned counsel for the respondents denied the averments made in the Civil Miscellaneous Petition and contended that the petitioner has violated the terms and conditions of the Joint Development Agreement, the same cannot be adjudicated by this Court in view of the admitted facts referred to supra.
10. It is not in dispute that there exists arbitration clause i.e., clause No.26.4 in the Joint Development Agreement dated 09.09.2010, which reads as under:
“26.4 In the event of the parties being unable to resolve the dispute by conciliation as above or within such further time as the parties may mutually agree, the dispute may be referred by either party to arbitration by a panel of three arbitrators (one to be appointed by First Party, the other by Second Party and third by the two arbitrators) in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any re-enactment or modification thereof and shall be decided by such Arbitral Tribunal. The award shall be final and binding on the parties.”
It is also not in dispute that the petitioner has complied with the provisions of Section 11(5) of the Act by issuing legal notice dated 06.09.2018 to the respondents. Hence, there is no impediment for this Court to appoint sole arbitrator to adjudicate the dispute between the parties in terms of clause No. 26.4 of the Joint Development Agreement.
11. In view of the above, the Civil Miscellaneous Petition is allowed. Hon`ble Mr. Justice A.N. Venugopala Gowda, former Judge of this Court, is appointed as sole Arbitrator to adjudicate the dispute in terms of clause No.26.4 of the registered Joint Development Agreement dated 09.09.2010 entered into between the parties.
12. Registry is directed to send a copy of this order to Hon`ble Mr. Justice A.N. Venugopala Gowda, former Judge of this Court, and Arbitration Centre, Bengaluru, for reference forthwith.
Sd/- JUDGE sma