IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF DECEMBER, 2019 BEFORE THE HON’BLE Mr. JUSTICE B. VEERAPPA CMP No. 379/2018 BETWEEN :
Sri. Subramanian Iyer S/o. R. Padmanabhan Aged about 39 years R/o. B-2-301 Nisarg Nirman Co-operative Society Survey No. 165/1 Pimple Saudagar Pune – 411 027. … PETITIONER (By Smt. Bharati Patil, Adv.) AND :
Guranteed Rentals Pvt. Ltd., Rep. by its 1. Sri. Harshavardhana Raikwar, Director 2. Sri. Subhajit Ray Authorized Signatory Both are R/a. 3550 2nd Floor, 3rd Cross 13th H Main HAL 2nd Stage Indiranagar Bengaluru – 560 008 Karnataka State. … RESPONDENTS (By Sri. Ajith, Adv., for Sri. Thejesh P., Adv.) ---
This CMP is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 with a prayer to pass an order appointing and referring the disputes between the petitioner and respondents to an Arbitral Tribunal and etc.
This CMP coming on for Admission this day, the Court passed the following;
O R D E R The present civil miscellaneous petition is filed under the provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter for the sake of brevity referred to as the Act) for appointment of sole arbitrator in terms of the arbitration clause in the agreement dated 28.11.2016 entered into between the parties.
2. It is the case of the petitioner that the petitioner and respondents have entered into an agreement on 28.11.2016 for the purchase of home appliances, furniture and fixtures to utilize the same for renting and leasing under the name and style of Guaranteed Rentals Pvt. Ltd. The respondents have approached the petitioner and expressed their interest to obtain assets on lease basis. After discussion with the respondents, the petitioner has agreed to invest in leasing and renting out the assets with certain terms and conditions. The assets shown in the agreement are home appliances, furniture and fixtures. The lease period was for 12 months from the date of agreement. The respondents have agreed to provide the list of assets required for further sub-lease to the customers. Based on the requirement the petitioner has agreed to authorize the respondents to purchase the assets on behalf of the petitioner.
3. It is the further case of the petitioner that the petitioner has transferred an amount of Rs.9.00 lakhs on 08.12.2016 in two parts to the respondents. Further, the respondents have utilized the same. As per the agreement respondents were required to purchase brand new home appliances, furniture and fixtures. After purchasing the same original invoice was required to be sent to the petitioner and the same was not complied by the respondents. As per the agreement the respondents were to pay minimum guaranteed IRR at 18% per annum on petitioner’s investment i.e, on whatever assets purchased by the respondents on behalf of the petitioner. Respondents have agreed that 50% of the monthly rental revenue earned on the assets by the respondents will be transferred to the bank account of petitioner by the 5th day of corresponding month. The respondents have also agreed that they are responsible to find out the customers, operating the assets, invoicing, collection of rent etc. The respondents have not followed the terms and conditions of the agreement and failed to pay 50% of rental/lease income which they have earned. The respondents have not produced details of the purchase invoice of home appliances, furniture and fixtures, details of rental/lease agreement of the customers, details of month-wise rent/lease amount recovered by them from the customers. Therefore, the petitioner has issued legal notice on 05.03.2018 calling upon he respondents to comply the terms and conditions of the agreement by nominating their own arbitrator. The same was replied by the respondents by reply dated 16.04.2018 disputing the amount and it is due to failure on the part of the petitioner, the business could not be proceeded and therefore, the respondents nominated their own arbitrator to adjudicate the dispute between the parties. Hence, the petitioner is before this Court for the relief sought for.
4. I have heard the learned counsel for the parties and perused the records carefully.
5. Learned counsel for the petitioner reiterating the averments made in the civil miscellaneous petition contended that there is no dispute with regard to the existence of agreement dated 28.11.2016 and arbitration clause in the said agreement. Petitioner has issued legal notice on 05.03.2018 as contemplated under Section 11(5) of the Act nominating his own nominee. The respondents have disputed payment, quantum and also mentioned their nominee in the reply. There is no dispute with regard to the existence of document and arbitration clause. Therefore, sought to allow the civil miscellaneous petition.
6. Per contra, Sri. Ajith, learned counsel for the respondents submitted that as the petitioner has violated the terms and conditions of the agreement, the business could not be proceeded with and in fact the respondent has invested Rs.9.00 lakhs. Therefore, he sought to dismiss the civil miscellaneous petition.
7. Having heard the learned counsel for the parties it is not in dispute that an agreement duly singed by the parties as contemplated under Section 7 of the Act. There is no dispute with the terms of the agreement between the parties. According to the petitioner, respondents are liable to pay a sum of Rs.64.00 lakhs. According to the respondents they have already invested Rs.09.00 lakhs and it is the petitioner who failed to perform his part of the contract. Therefore, the dispute arose between the parties and they have nominated their respective arbitrators to adjudicate the dispute. In view of the aforesaid admitted facts there is no impediment for this Court to appoint sole arbitrator to adjudicate the dispute between the parties.
8. Arbitration clause regarding settlement of disputes in the agreement entered into between the parties reads as under:
Settlement of Disputes The agreement shall be deemed to be an agreement made at Bangalore. If any dispute or difference arises out of this agreement that parties shall under vigorous and sincere efforts to resolve the dispute/difference through negotiations amicable, failing which the dispute shall be referred to the sole Arbitrator which will be a third party having no direct or indirect relationship with Lessor or Lessee and his decision shall be binding upon both the parties. The arbitration proceeding shall be held in Bangalore accordance with the provisions of Indian Arbitration Act.
9. In view of the above, the Civil Miscellaneous Petition is allowed. Hon’ble Mr. Justice Jawad Rahim, Former Judge of this Court is appointed as sole arbitrator to adjudicate the dispute in terms of the arbitration clause contained in the agreement dated 28.11.2016 entered into between the parties.
10. Registry is directed send a copy of this order to the Hon’ble Mr. Justice Jawad Rahim and the Arbitration Centre, Bengaluru forthwith.
11. Office is directed to return the original agreement to the learned counsel for petitioner after following the procedure in accordance with law.
Sd/- JUDGE LRS.