Bangalore District Court
M/S Green Prestine Site Owners vs Smt. B. Eshwaramma on 14 December, 2021
1 Com.A.P.No.9/2020
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT):
BENGALURU CITY. (CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A.,LL.M,
LXXXVIII Addl. City Civil & Sessions Judge
Bengaluru City.
Dated this the 14th day of December 2021
Com.A.P.No.9/2020
Appellant: M/s Green Prestine Site Owners
Welfare Association (Regd.),
Having its principal office at No.39/33,
Vinayaka Street, Garebhavipalya,
Begur Hobli, Bangalore South Taluk,
Represented by its Honorary Secretary
Sri. G. Venkata Hari Krishna,
Aged about 37 years,
S/o Sri. G. Venkatanarayan.
(By Sri. Honnappa, Advocate)
-vs-
Respondents: 1. Smt. B. Eshwaramma,
Aged about 60 years,
W/o late P. Nataraj,
2. Sri. N. Manjunath,
Aged about 38 years,
S/o late P. Nataraj,
3. Sri. P.N. Vishwanatha Reddy,
Aged about 36 years,
S/o late P. Nataraj,
4. Kum. N. Usha,
Aged about 22 years,
2 Com.A.P.No.9/2020
D/o late P. Nataraj,
No.1 to 4 referred above are all
R/at No.181, R.V. Road, V.V. Puram,
Bangalore - 560 004.
5. Sri. N. Bhaskar,
Aged about 59 years,
S/o late Narasimhan,
R/at No.12/6, 1 st Main Road,
Kalappa Block, Bangalore - 21.
JUDGMENT
This is a petition filed by the petitioner under Sec.34 of the Arbitration and Conciliation Act, 2015 and sought for to set the order dated 15.07.2019 passed by the arbitrator in AC No.13/2019 and restore the arbitration proceedings and other reliefs which this court deems fit in the circumstances of the case including an order as to costs in the interest of justice and equity.
2. Brief facts of the petition are as under:
The plaintiff in its plaint has alleged that who is a company is constituted association under the name and style of M/s Green Prestine Site Owners Welfare Association. The members of the association have contributed their hard earned money for the purchase of site to construct the residential houses. After the constitution of association came in contact with the respondents and claimed to be the co-owners of title and in possession and 3 Com.A.P.No.9/2020 enjoyment of the agricultural land bearing resurvey No.61 measuring 20 guntas, land bearing resurvey No.167 measuring 38 guntas, land bearing resurvey No.167 measuring 38 guntas situated and the agricultural land bearing resurvey No.102 measuring 20 guntas are situated at Kammasandra Village, Sarajapur Hobli, Bengaluru South Taluk. The respondents are the residents of Kammasandra village having clear title over the item No.1 of the agricultural land bearing resurvey No.161 measuring 20 guntas situated at Kammasandra village, Sarjapura Hobli, Bengaluru South Taluk and also claimed that the item No.2 to 4 of the properties are in actual possession of the respondents since the husband of the respondent No.1 and father of the other respondents and respondent No.5 having legal rights over the lands and late P. Nataraj was the agreement holder to the item No.2 to 4 of the schedule lands and the respondents have succeeded the holding of the schedule land shown in item No.1 to 4 and who has oblige to enter into MOU on 10.12.2014 and shows keen interest in purchasing the schedule lands stated in the MOU on the terms and conditions stated in the MOU dated 10.12.2014.
As per terms in the MOU who is the 2 nd party in the MOU referred as MOU agreed to purchase the entire lands of item No.1 to 4 either through themselves or through their rightful owners for 4 Com.A.P.No.9/2020 total share consideration amount of Rs.7,10,00,000/- only and paid Rs.1 crore only by cash and 10 lakhs by way of 5 cheques towards first advance which was received by the respondents, however on or after coming to the knowledge regarding the pending civil suit in OS No.352/2009 and O.S.No.353/2009 filed against the respondents.
3. The plaintiff in its plaint has further alleged that in confusing and disturb state of mind and other members who invested the money to the project were demanding the delay in executing the project as per the terms and conditions of the association, which was formed and managing committee was in dilemma and could not able to assign proper reasons for the delay due to misrepresentation of the respondents, on knowing the civil dispute pending before the court was constrained to made the male members of the MOU and requested to return the money paid in sum of Rs.1,50,00,000/- with or without interest, however promise to set right the disputes with the persons who filed the suit against the respondents and would execute the sale deed as per the agreed terms and conditions and oblige to wait for the amicable settlement either to receive money of Rs.1,50,00,000/- with interest or without interest. In the meanwhile the respondents taking the advantage the terms and 5 Com.A.P.No.9/2020 conditions of clause 9 of MOU any disputes between the parties shall settle their disputes amicably between themselves or with intervention of the well wishers and friends. The respondents have not initiated any such meeting to settle the dispute on the contrary legal notice came to be addressed for seeking an appointment of arbitrator as required under Sec.11 of the Arbitration and Conciliation Act, which was not received however association has received the notice sent by the Hon'ble High Court on the petition filed by the respondents seeking for appointment of the arbitrator in CMP No.12/2017 on receipt of the notice appointed the counsel to represent organization and instructed the counsel to talk to the counsel of the respondents to settle the disputes for payment of the amount which received by the respondents of Rs.1,50,00,000/- along with admissible interest. On 06.05.2017 got issued legal notice to the Respondents to calling upon to execute the sale deed to receive the full sale consideration amount and also to handover all the original documents pertaining to the schedule property shown in the MOU and to execute the sale deed alternatively to refund the part payment of sale consideration amount which received of Rs.1,50,00,000 along with interest @ 24% p.a. On receipt of the notice the respondents sent a untenable reply on 16.05.2017 and 6 Com.A.P.No.9/2020 its counsel had proposed the instructions to the counsel Sri. R.B. Sadashivappa, Associates to settle the dispute and even seek an adjournment on the subsequent dates, when the matter was listed before the Hon'ble High Court of Karnataka informed on the instruction of the respondents, their clients are not interested to any amicable settlement before the court and the case was called for consideration. The Hon'ble High Court of Karnataka appointed the sole arbitrator to adjudicate the dispute between them and justice B.Manohar has been preoccupied in some other assignment, arbitration center was pleased to inform the parties to seek fresh appointment of the arbitrator in the place of justice B.Manohar to adjudicate the dispute and the respondents have not taken positive steps seeking appointment of the fresh arbitrator and waited for considerable time limit hoping that the respondents would file an interim application for seeking fresh arbitrator in the place of Justice B.Manohar. The respondents have not filed any such application seeking for fresh appointment of the arbitrator which could establishes that the respondents were not interested to settle the disputes or put forth their claim to establish that the organization have committed any breach of contract. On the contrary instructed their counsel to seek appointment of fresh arbitrator in view of the subsequent 7 Com.A.P.No.9/2020 development and counsel was constrained to file an interim application seeking fresh appointment of the arbitrator and the said interim application was listed before the Hon'ble High Court of Karnataka and pleased to appoint a justice Ashok.B. Hinchagiri to adjudicate the dispute between the parties.
4. The plaintiff in its plaint has further alleged that on the date of appointment of his lordship justice Ashok.B.Hinchagiri, the counsel for the respondents was present and also consented for the same and which is within the knowledge of the respondents surprisingly the respondents have not filed any claim petition before the Hon'ble authority even though the conception of seeking appointment of arbitrator as required under Sec.11 of the Arbitration and Conciliation Act, initiated by the respondents by filing the CMP No.12/2017 before the Hon'ble High Court of Karnataka which clearly establishes the mindset of the respondents and the conduct. The arbitrator got issued a notice to both parties fixing the date as well as hearing of the matter. The said notice apart form informing the date of setting and other details, the arbitrator also sought both parties to deposit the arbitration fees which was around Rs.2,99,000/- per sign. The respondents who initiated the arbitration proceedings they never turned up and filed any claim statement before the arbitrator. On 8 Com.A.P.No.9/2020 the other hand, filed the counter claim against the respondents and in fact the said counter claim, the respondents did not file the objections. After hearing the matter for some period and after giving opportunity to both parties to remit the prescribed fee the same was not done. In fact paid the same sum to their previous counsel for deposit however for the reasons best known to him the said amount never got deposited. After giving several opportunity to the parties involved passed an order and recording the reasons on 15.07.2019 closed the arbitration proceedings and it was not aware of closure of the said arbitration proceedings and in fact waiting for the outcome of the arbitration proceedings. When did not get the notice form the arbitrator as well as its counsel went and enquired the arbitration center, then only came to know that the arbitration proceedings was came to be closed on account of non payment of the prescribed fee by both parties and who is not aware of the said facts and soon after coming to know about the closure of arbitral proceedings instructed to prosecute the matter seeking for restoration of the arbitration proceedings, thereby filed the instant petition and prays for allow the petition.
9 Com.A.P.No.9/2020
5. In response of the notice, the respondents did not appear nor filed their objection statement as they were placed exparte.
6. Heard the arguments on the plaintiff side.
7. The points that arise for consideration of this court are as under:
1) Whether the plaintiff has made out any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the order dated 15.07.2019 passed by the arbitrator in A.C.No.13/2019 and restore the arbitration proceedings?
2) What order?
8. My answer to the above points are as under:
Point No.1: In the Negative;
Point No.2: As per final order, on the following;
REASONS
9. POINT NO.1: The plaintiff has approached the court on the ground that the respondents who are the owners of the schedule properties and they entered into a MOU for purchase of the schedule properties, but the Respondents did not come forward to execute the registered sale deed though they have received part payment of Rs.1,50,00,000/- in spite of repeated request and demand and though the dispute pending before the Civil Court in 10 Com.A.P.No.9/2020 respect of the schedule properties which was not brought to the notice and which came to the knowledge and requested for refund of the earnest money which paid, but the respondents did not come forward, instead filed the CMP which was not prosecuted by the respondents and subsequently interim application has been filed and sole arbitrator has been appointed but non deposit of the fee before the arbitration center which was came to be closed thereby the plaintiff has filed the instant petition.
10. The learned counsel for the plaintiff in her arguments has submitted that the respondents No.1 to 4 who are the owners of the schedule properties are in actual possession and enjoyment and the respondent No.5 who is the agreement holder of the item No.2 to 4 and the MOU was taken place in between the petitioner and the respondents for purchase of the schedule properties for the association purpose to form the site and paid Rs.1,50,00,000/- as stated in Para No.7 of the plaint though the respondents/defendants were acknowledged for receipt of Rs.1,50,00,000/- from the plaintiff but they did not come forward to execute the registered sale deed in favour of the plaintiff in spite of repeated request and demand. Instead the plaintiff came to know number of disputes have been pending against the very 11 Com.A.P.No.9/2020 Respondents in respect of the schedule properties before the court which was not brought to the notice of the plaintiff at the time of entering into MOU, when after coming to know by the plaintiff requested the Respondents to calling upon them to execute the registered sale deed or to refund the earnest money which paid by the plaintiff to the Respondents but instead the Respondents were filed the CMP before the Hon'ble High Court of Karnataka and sole arbitrator was came to be appointed and lordship justice B.Manohar has been preoccupied in some other assignments, thereby it was brought to the notice of both parties for seeking fresh appointment of arbitrator in the place of justice B.Manohar to adjudicate the dispute, but the respondents did not come forward to take steps, again the plaintiff has taken steps and one more interim application was came to be filed and its was allowed and justice Ashok.B.Hinchagiri has been appointed as sole arbitrator and notice got issued to both parties and directed them to deposit the arbitration fee of Rs.2,99,000/- per sign but did not come forward to deposit the same, thereby the arbitration proceedings was came to be closed, but it was not within the knowledge of the plaintiff for closure of the arbitration proceedings, therefore, it is just and necessary to restore the arbitration proceedings and to accord permission to the plaintiff 12 Com.A.P.No.9/2020 to deposit the arbitration fee, otherwise the plaintiff will be put to irreparable loss and injustice and prays for allow the petition.
11. It is an admitted fact the plaintiff has filed the instant petition under Sec.34 of the Arbitration and Conciliation Act, 2015 and sought for to set aside the order dated 15.07.2019 passed by the arbitrator in A.C.No.13/2019 and to restore the arbitration proceedings. Now the question is whether the relief which sought by the plaintiff in the instant petition comes within the purview of Sec.34 of the Arbitration and Conciliation Act and whether the plaintiff has made out any of the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the order passed in AC No.13/2019. Therefore, it is just and necessary for reproduction of Sec.34 of the Arbitration and Conciliation Act for proper appreciation which reads like this:
34 Application for setting aside arbitral award. --
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3).
(2) An arbitral award may be set aside by the Court only if--
(a) the party making the application furnishes proof that--
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or 13 Com.A.P.No.9/2020
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation. --Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section 14 Com.A.P.No.9/2020 (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
The above provision is very much clear in order to bring the case within the purview of Sec.34 of the Arbitration and Conciliation Act, the plaintiff has to establish any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to set aside the order which passed by the arbitrator. 15 Com.A.P.No.9/2020
12. Now let me know the materials on record to know whether the facts which pleaded falls within the ambit of Sec.34 of Arbitration and Conciliation Act, as the petitioner has come up with the instant suit and sought for to set aside the order dated 15.07.2019 passed by the arbitrator in AC No.13/2019 and to restore the arbitration proceedings. The materials which placed by the petitioner on record reflects that the arbitration proceedings has been initiated before the arbitration center and both parties have been directed to deposit the arbitration fee which was around Rs.2,99,000/- per sign but in spite of the direction, both parties did not deposited the arbitration fee before the arbitration center, thereby the proceedings which was initiated was came to be closed on 15.07.2019, thereby the plaintiff has filed the instant suit, but whereas the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act and the relief which sought by the plaintiff in the instant suit do not fall under Sec.34 of the Arbitration and Conciliation Act. When there was no award which passed by the sole arbitrator, either against the plaintiff nor the Respondents question of adjudication of the relief under Sec.34 of the Arbitration and Conciliation Act does not arise. Since the plaintiff has not approached the court to set aside the award which passed by the 16 Com.A.P.No.9/2020 sole arbitrator, but instead the plaintiff has approached the court to set aside the order dated 15.07.2019 passed by the arbitrator in AC No.13/2019 and to restore the arbitration proceedings, therefore the relief which sought by the plaintiff do not fall under Sec.34 of the Arbitration and Conciliation Act. So, question of call for the records nor set aside the order dated 15.07.2019 passed by the arbitrator in AC 13/2019 nor restore the arbitration proceedings does not arise, since the relief which sought by the plaintiff do not fall within the purview of Sec.34 of the Arbitration and Conciliation Act. Hence, I am of the opinion that the point No.1 is answered as Negative.
13. POINT NO.2: In view of my answer to point No.1 as stated above, I proceed to pass the following;
ORDER The petition under Sec.34 of Arbitration and Conciliation Act, 1996 filed by the plaintiff is hereby dismissed.
No order as to costs.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 14th day of December, 2021) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City