Karnataka High Court
Mr.Heny Lachman Mahtani vs M/S Bharath Infraa Tech Private Limited on 9 June, 2022
Author: Krishna S.Dixit
Bench: Krishna S.Dixit
1
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 9th DAY OF JUNE, 2022
BEFORE
THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT
C.M.P. NO.316 OF 2021
BETWEEN:
1. MR.HENY LACHMAN MAHTANI
S/O LATE MR. LACHMAN ISARDAS MAHTANI
AGED ABOUT 56 YEARS
R/O 13TH FLOOR, FLAT A WOODBURY COURT,
137 POKFULAM ROAD,
HONGKONG, ON BEHALF OF M/S PLATINUM
REALTORS LIMITED
THROUGH HIS AUTHORISED REPRESENTATIVE
MR ROHIT SETHI.
2. MR HANUT SINGH, S/O MR. N B SINGH,
AGED ABOUT 51 YEARS
1, KAPASHERA ESTATE,
NEW DELHI 110 037.
THROUGH HIS AUTHORISED REPRESENTATIVE
MR. ROHIT SETHI.
3. MR HENY LACHMAN MAHTANI
S/O LATE MR. LACHAMAN ISARDAS MAHTANI
AGED ABOUT 56 YEARS,
R/O 13TH FLOOR, FLAT A,
WOODBURY COURT, 137,
POKFULAM ROAD, HONG KONG,
THROUGH HIS AUTHORISED REPRESENTATIVE
MR ROHIT SETHI
4. MR PUNKAJ RISHI
S/O MR. PRITHVI RAJ RISHI
2
AGED ABOUT 60 YEARS,
19 UNDERWOOD DRIVE,
WEST ORANGE NJ 07052, USA
THROUGH HIS AUTHORISED REPRESENTATIVE
MR. ROHIT SETHI.
5. MR. MICK DADLANI,
S/O MR. PREM DADLANI,
AGED ABOUT 50 YEARS
7717, BARNSTABLE PLACE ,
ROCKVILLE MD 20855, USA
THROUGH HIS AUTHORISED REPRESENTATIVE
MR. ROHIT SETHI.
6. MR. JITEN MANSUKH RADIA
S/OMR. MANSUKHLAL POPATLAL RADIA
AGED ABOUT 58 YEARS,
R/O 42, KINGSEND RUISLIP
MIDDLESEX HA4 7DA, ENGLAND
THROUGH HIS AUTHORISED REPRESENTATIVE
MR. ROHIT SETHI.
7. MR. NICKIE PATEL,
S/O MR. RAMANBHAI BHAGUBHAI PATEL
AGED ABOUT 55 YEARS,
2, CRAWFORD AVENUE, WEMBLEY
MIDDLESEX HA02HT, ENGLAND
THROUGH HIS AUTHORISED REPRESENTATIVE
MR. ROHIT SETHI.
8. MS CHANDNI SANAM RISHI
D/O MR. PRITHVI RAJ RISHI
AGED ABOUT 55 YEARS
1002 E UNIWORLD CITYEAST,
SECTOR 30, GURGAON, HARYANA.
THROUGH HER AUTHORISED REPRESENTATIVE
MR ROHIT SETHI.
3
9. MS REGGIE CHUA SINGH
W/O MR. HANUT SINGH
AGED ABOUT 47 YEARS,
1, KAPASHERA ESTATE,
NEW DELHI 110 037.
THROUGH HER AUTHORISED REPRESENTATIVE
MR ROHIT SETHI.
10. MR MANISH ASHOK MALHOTRA
S/O MR. ASHOK MALHOTRA,
AGED ABOUT 53 YEARS,
W-3, FLAT 54, WILLINGTON ESTATE
DLF PHASE IV, GURGAON,
HARYANA.
THROUGH HIS AUTHORISED REPRESENTATIVE
MR ROHIT SETHI.
11. MR RAMZANALI MURAD KARIMI,
S/O MR. RAMZANALI KARIMI,
AGED ABOUT 36 YEARS,
1252, MANOR OAKS CT. DUNWOODY,
GEORGIA 30338 USA,
THROUGH HIS AUTHORISED REPRESENTEATIVE
MR ROHIT SETHI.
12. MS. NOORBANU AHMED,
D/O MR. SUNDERJEE KANJI MASKATI,
AGED ABOUT 73 YEARS,
2424, SPENCERS WAY, STONE MOUNTAIN,
GEORGIA 30087, USA.
THROUGH HER AUTHORISED REPRESENTATIVE
MR ROHIT SETHI.
13. MR SANJIV RALPH NORONHA
S/O MR. RALPH AUGUSTO NORONHA
AGED ABOUT 54 YEARS,
4
67, STEVENS ROAD 01-01,
WHITE HOUSE RESIDENCES,
SINGAPORE 257855,
THROUGH HIS AUTHORISED REPRESENTATIVE
MR. ROHIT SETHI.
14. MR. KARAN CHABRIA,
S/O MR NANDKUMAR CHABRIA,
AGED ABOUT 48 YEARS,
9 RHU CROSS, 07-13 COSTA RHU
SINGAPORE 437 436,
THROUGH HIS AUTHORISED REPRESENTATIVE
MR. ROHIT SETHI.
15. MR SUDHIR SINGH DUNGARPUR
S/OMR. SAMAR SINGH
AGED ABOUT 49 YEARS
403, PALM SPRINGS, GOLF COURSE ROD,
DLF, PHASE -5, GURGAON,
HARYANA 122 002.
THROUGH HIS AUTHORISED REPRESENTATIVE
MR ROHIT SETHI.
16. MS ANUJA PRIYADARSHINI
MAHINDRA SHARMA
D/O MR. HARISH C MAHINDRA
AGED 59 YEARS,
R/O 1-B-3, REGENCY PLACE
7, RICHMOND ROAD, BANGLAORE 560 025.
KARNATAKA. THROUGH HER AUTHORISED
REPRESENTATIVE, MR. ROHIT SETHI.
...PETITIONERS
(BY SRI. SIDDHARTH YADAV, A/W
MRS. ANITA ABRAHAM, ADVOCATE)
AND:
1. M/S BHARATH INFRAA TECH PRIVATE LIMITED
THROUGH ITS CHAIRMAN
5
MR DAYANAND REDDY,
HAVING ITS REGISTERED OFFICE AT 186
FIRST FLOOR, FIRST CROSS,
WILSON GARDEN, BANGLAORE 560 027.
ALSO AT 48, HEBBAGODI,
HOSUR MAIN ROAD,
HUSKUR GATE, ELECTRONIC CITY POST,
BANGALORE 560 100.
ALSO AT 107, 80 FEET ROAD,
IV BLOCK, KORAMANGALA
BANGLAORE 560 034.
2. M/S GOLD CITY BUILDERS AND
DEVELOPERS LIMITED
HAVING ITS REGISTERED OFFICE AT
186, FIRST FLOOR, FIRST CROSS,
WILSON GARDEN, BANGALORE 560 027.
ALSO AT 304/306, III FLOOR,
NO. GOLD TOWERS, RESIDENCY ROAD,
BANGALORE 560 025.
... RESPONDENTS
(BY SRI. VIVEK REDDY, SENIOR COUNSEL A/W
SRI. V SHIVAKUMAR, ADVOCATE)
THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER
SECTION 11(5) OF THE ARBITRATION AND CONCILIATION ACT
1996, PRAYING THIS HONBLE COURT TO A) APPOINT A RETIRED
JUDGE OF THIS HON'BLE COURT AS THE SOLE ARBITRATOR TO
ADJUDICATE THE CLAIMS OF THE PETITIONERS AND ALLOW
THE SAID ARBITRATOR TO ADJUDICATE UPON ALL THE
PENDING DISPUTES BETWEEN THE PARTIES ARISING OUT OF
THE BREACH OF THE JOINT VENTURE AGREEMENT DATED
24/04/2006 PRODUCED HERETO AS ANNEXURE-H AND ETC.,
THIS CIVIL MISCELLANEOUS PETITION HAVING BEEN
HEARD AND RESERVED FOR ORDERS, THIS DAY, THE COURT
PRONOUNCED THE FOLLOWING:-
6
ORDER
This petition filed under Section 11(5) of the Arbitration and Conciliation Act, 1996 (hereinafter 'the 1996 Act') seeks appointment of a retired High Court Judge as the sole arbitrator to adjudge the dispute between the parties arising out of alleged breach of the Joint Venture Agreement (hereinafter 'JVA') of the year 2006 a copy whereof is at Annexure - H. After service of notice, Respondents having entered appearance through their Advocate on record have filed the Statement of Objections and make submissions resisting the petition.
2. FACTS IN BRIEF:
(a) 1st Respondent - company entered into a Memorandum of Understanding (hereinafter 'MOU') dated 31.03.2006 with the 1st Petitioner for sale & development of Scheduled Property measuring 14922 sq. ft. located at Srinivagilu, Bangalore. Subsequently, a Joint Venture Agreement between the 1st respondent and 1st Petitioner was allegedly executed. Both the MOU and the JVA at paragraph 15 and Article 11 respectively have arbitration clauses for 7 resolution of disputes. On 25.05.2006 Respondent No.1 & 2 entered into a Joint Development Agreement (hereinafter 'JDA') for development of the scheduled property. As per the contractual obligations Petitioners 3 - 16 and other investors have allegedly transferred funds to Respondent Nos.1 & 2.
(b) More than a decade having passed, no development of the Scheduled Property has taken place. On 22.06.2020, 21.07.2020 & 01.09.2020 legal notices were issued to Respondent No. 1 to provide clarity on the alleged lapses & defaults in the matter of development of land and to offer explanation for the act of Respondent No. 1 in entering into another agreement for development of the very same Property with a third party and in November of 2020, construction on the Scheduled property has commenced.
(c) Petitioners approached the Civil Court and obtained an order of stay & status quo, at the hands of learned Additional City Civil Judge, Bangalore in a Section 9 petition. A copy of said order avails at Annexure-Q. Subsequently, the respondents approached this Court for obtaining the 8 modification of said order only to the extent of moving ahead with the construction and accordingly an order is made. A copy of said order avails at Annexure-R. Therefore, petitioners seek appointment of a retired High Court Judge as the sole Arbitrator.
3. CONTENTION OF PARTIES:
(a) Learned Counsel appearing for the petitioners argued that there being no vestige of doubt as to existence of a valid arbitration clause in the JVA, and to the arbitrability of claim, the matter has to be referred for arbitration. In support of their case the counsel banked upon these decisions of the Apex Court and Delhi High Court viz: BHARAT SANCHAR NIGAM vs. NORTEL NETWORKS INDIA PVT LTD1, N.N GLOBAL MERCANTILE PRIVATE LTD vs. INDO UNIQUE FLAME LTD2, UTTARAKHAND PURV SAINIK KALYAN NIGAM LTD vs. NOTHERN COAL FIELD LTD3, BHARAT SEWA SANSTHAN vs. U.P. ELECTRONICS CORPORATION4, RECKITT BENCKISER (INDIA) PVT LTD vs. REYNDERS LABEL PRINTING 1 (2021) 5 SCC 738 2 (2021) 4 SCC 379 3 (2020) 2 SCC 455 4 (2007) 7 SCC 737 9 INDIA PVT LTD5 & NCC LIMITED vs. INDIAN OIL CORPORATION LTD6.
(b) Learned counsel appearing for the contesting Respondents per contra contended as to (i) bar of limitation;
(ii) absence of the original JVA; (iii) inadmissibility of JVA for want of stamp duty under the provisions of the Karnataka Stamp Act, 1957, (iv) want of registration u/s 17(1) of the Registration Act, 1908 & (v) all petitioners not being parties eo nomine to the arbitration agreement. In support of their submission, they placed reliance on the following rulings viz: N RADHAKRISHNAN vs. MAESTRO ENGINEERS7, TRANSVAHAN TECHNOLOGIES INDIA vs. SESPSON INDIA PVT LTD8, M/S RAMAKRISHNA CONSTRUCTIONS vs. NATIONAL TECHNOLOGICAL INSTUTITIONS HOUSING CO-OPERATIVE SOCIETY9, M.V. VALI PERO'S APPELANTS vs. FERNANDO LOPEZ10.
5 (2019) 7 SCC 62 6 (2019) SCC Online 6964 7 (2010) 1 SCC 71 8 (2018) SCC Online KAR 3783 9 Civil Miscellaneous Petition No.215 of 2018 disposed off on 12.11.2020 10 AIR 1989 SC 2206 10
4. INTERLOCUTARY APPLICATIONS:
(a) Petitioners have filed I.A. No.1 on 02.08.2021 for dispensing with the production of original documents/certified copies on the ground of their unavailability i.e., Annexures A -
V; however, only a certified copy of the Joint Development Agreement dated 25.05.2006 is provided at Annexure - J. Objections to this I.A were filed on 07.10.2021 whereby, Respondent No.1 vehemently disputed the very existence of these documents. Furthermore, a Cancellation Deed dated 17.12.2018 drawn by and between the 1st & 2nd Respondents is also produced at Annexure - B to the Statement of Objections.
(b) Respondent No.1 filed I.A. Nos. 3 & 4 on 07.10.2021 seeking rejection/dismissal of the Civil Miscellaneous Petition on the grounds that no stamp duty has been paid on the agreement in question, as warranted under section 34 of the 1957 Act and the same has not been registered under Section 17(1) of the 1908, Act. Petitioner Nos. 3 to 16, not being parties to MOU, JVA & JDA are neither necessary nor proper parties and nor have they any litigable right in this Civil 11 Miscellaneous Petition. Respondent No.1 filed I.A Nos. 5 & 6 on 07.10.2021 for (i) directing production of original documents, i.e., MOU & JVA at Annexures F & H and (ii) for impounding of these documents after production of the original.
5. Having heard the learned counsel for the parties and having perused the petition papers and also having adverted to the relevant of the rulings cited at the Bar, this court declines indulgence in the matter for the following reasons:
A. AS TO NON-PRODUCTION OF ORIGINAL JOINT VENTURE AGREEMENT:
(a) The dispute projected by the petitioners arises under the alleged Joint Venture Agreement dated 24.04.2006. Only a copy of the said agreement is placed on record along with a dispensation application in I.A. No.1 supported by affidavit. It is contended by the petitioners that the original is in the custody of contesting respondents and that they are not yielding the same despite request. However, the respondents stoutly denied the same and disputed the very existence of this instrument. Their learned Senior Advocate vehemently argued that the same even otherwise being unregistered & not 12 duly stamped cannot be acted upon. It is a well settled position of law that want of registration and non - stamping of instruments per se do not bar appointment of an arbitrator vide N.N GLOBAL, supra; the requirement for referring a matter to arbitrator is only 'existence of valid arbitration agreement'. The Apex Court in DLF HOME DEVELOPERS LIMITED V. RAJAPURA HOMES PRIVATE LIMITED11 at paragraph 19 observed as under:
"19.To say it differently, this Court or a High Court, as the case may be, are not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen Arbitrator. On the contrary, the Court(s) are obliged to apply their mind to the core preliminary issues, albeit, within the framework of Section 11(6-A) of the Act. Such a review, as already clarified by this Court, is not intended to usurp the jurisdiction of the Arbitral Tribunal but is aimed at streamlining the process of arbitration."
(b) Admittedly, the subject transaction is more than decade & a half old. Ordinarily, transactions involving huge properties worth crores of rupees, as the one at hands, are generally registered to secure prima facie credence for them and to pre-empt their denial. The purported copy of the said 11 2021 SCC OnLine SC 781 13 document prima facie does not reflect that it is drawn on a non-judicial stamp paper. Ordinarily in drawing the transaction like this, non-judicial stamp papers are used, cannot be much disputed lost sight of. It is not that the parties to transactions were oblivious or that they did not have exposure to the outer world. All they are highly educated and city people. No explanation is offered by them as to why registration of the document was not desired regardless of their arguable non- requirement of compulsory registration. If other contemporaneous documents such as the Joint Development Agreement dated 25.05.2006 are registered, the non-registration of subject 'JVA' coupled with the fact that the transaction has been reduced to writing on ordinary paper with no stamping raises a thick ring of doubt as to the very transaction and about the very existence of the original document; whether there was such a transaction as is sought to be projected, by producing a copy of the document can better be adjudicated at the hands of the regular Civil Courts and not that by an arbitrator. The observations of the Apex Court in N.RADHAKRIHSNAN, supra, at para 11 support this view:
14
"11...the facts of the present case does not warrant the matter to be tried and decided by the Arbitrator, rather for the furtherance of justice, it should be tried in a court of law which would be more competent and have the means to decide such a complicated matter involving various questions and issues raised in the present dispute..."
(c) TRUE IT IS, N.N GLOBAL, supra provides that all civil or commercial disputes, either contractual or non- contractual, which can be adjudicated upon by a civil court in principle, can be ordinarily resolved through arbitration, is true. However, Section 11 Court cannot readily turn Nelson's eye to the genuine doubt as to the very existence of foundational documents that are hotly contested. The submission of petitioners that huge amounts of money have been paid to the contesting respondents inter alia through Bank transfer does not alter the position particularly in the absence of a prima facie nexus being established between the alleged payments in 2006-07 and the transaction in question. Justice of the case warrants that these hotly disputed questions of facts can better be ascertained at the hands of a Civil Court rather than of an Arbitrator, as rightly contended by the Sr. Advocate appearing for the answering respondents. 15 Petitioners' contention that the JVA being in the custody of 1st Respondent they cannot produce it is met with the vehement denial as to their very existence by the 1st respondent; in such a stalemate of the kind, there is no scope for Section 11 proceedings. The counsel for the 1st Respondent placed reliance on a decision of a Co-ordinate Bench of this Court in TRANSVAHAN TECHNOLOGIES INDIA supra; the following observation lends credence to this view:
"In view of the above, sub section (2) of Section 8 of the Act is mandatory and the judicial authority shall not entertain the application for referring the dispute to arbitration unless the applicants produce the original agreement or duly certified copies thereof before entraining the application..."
(d) Similarly another Co-ordinate Bench of this Court in Civil Miscellaneous Petition No.373 of 2018 between A.J HOSPITAL AND RESEARCH CENTER and DWISE HEALTH CARE SOLUTIONS PVT LTD disposed off on 09.10.2020 at paragraph 4, 5 & 6 has observed as under:
"4... The learned counsel also submits that the said agreement dated 15.07.2016 has been stamped and as such, the present petition is not maintainable.16
5. In view of the disputed question of fact with regard to custody and possession of the original agreement dated 15.07.2016 as well as whether stamp duty is payable on the same or not, I deem it fit and proper to dispose of this petition by reserving liberty in favor of the petitioner to seek appropriate remedies before the competent civil court in accordance with law...
6. Subject to the aforementioned directions and liberty reserved in favor of the petitioner, the petition stands disposed off."
(e) The reliance of the petitioners on the ruling in BHARAT SEWA, supra also does not much come to their aid since it does not lay down a thumb rule that once a photostat copy of a document is produced, the same should be invariably accepted in lieu of the original. In matters like this Courts exercising a limited jurisdiction under 11 of 1996 Act have to form an opinion on the rule of probability, regard being had to all attending circumstances. Production of original documents aids in assessing its prima facie veracity & genuineness. The requirement of producing them may be dispensed with only as an exception to the general rule and that too on cogent grounds. Prima facie establishment of the arbitration agreement in question is a sine-qua-non for invoking Section 11, inasmuch as the statute itself mandates 17 production of the original documents. Therefore, dispensation as sought for in the subject I.A. cannot readily be granted, in the absence of making out a strong case therefor.
B. AS TO BAR OF LIMITATION:
The original transaction in question, even according to petitioners is of the year 2006 and that the funds have been allegedly credited to the account of answering respondents in the year 2006 & 2007. This payment is denied by the said respondents. Even otherwise the requisite nexus between the payment of money and the transaction in question is not prima facie shown based on the material on record. As already mentioned above, the petitioners alleged about some mutual discussion concerning the dispute in question and exchange of letters/legal notices, the latest being of 22.06.2020, 21.07.2020 & 01.09.2020. If huge amounts of money have been paid fifteen years ago, the question obviously arises as to why the petitioners slept over the matter till now. No plausible explanation is offered for the delay & latches in the matter. Petitioners are neither peasants nor laborers nor they do hail from rural background. Now that, about fifteen years 18 have lapsed, petitioners are presenting a dispute for being referred to arbitration. This is difficult to accede to. It is not desirable to bestow indulgence for the litigants who approach the court after waking up from a deep slumber. To borrow the phraseology of Jeremy Bentham (1748 - 1832), "Law does not come to the aid of indolent". This apart, mixed question of law & facts like the limitation do not merit examination in a limited jurisdiction vested in this Court under Section 11(5) of the 1996 Act. Petitioners have an efficacious remedy of a Civil Suit, for the institution of which, Sec.11 constraints do not arise.
C. AS TO SOME PETITIONERS BEING NON - PARTIES:
The vehement contention of the respondents that all the petitioners do not happen to be parties eo nomine to the arbitration agreement and therefore reference to arbitration cannot be made pales into insignificance in view of an assumptive finding as to the non-existence of the JVA in question. Therefore, the same does not merit consideration in these proceedings. All contentions are kept open. 19
In the above circumstances and observations, this petition is disposed off, declining reference. However, it is open to the petitioners to agitate their cause before the jurisdictional Civil Court in accordance with law. Nothing hereinabove stated shall come in the way of such a suit, the above observations being confined to the disposal of this petition. All contentions are kept open.
All applications pale into insignificance because of main matter being disposed off.
Costs made easy.
Sd/-
JUDGE Bsv