Karnataka High Court
M/S. B S N L Employees Welfare Housing vs M/S. Ornica Builders And on 7 June, 2023
Author: R Devdas
Bench: R Devdas
-1-
NC: 2023:KHC:19382
C.M.P.No.510 of 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF JUNE, 2023
BEFORE
THE HON'BLE MR JUSTICE R DEVDAS
CIVIL MISC. PETITION NO. 510 OF 2022
BETWEEN:
M/S. B S N L EMPLOYEES WELFARE HOUSING
CO-OPERATIVE SOCIETY LTD
A SOCIETY REGISTERED UNDER
THE KARNATAKA CO-OPERATIVE
SOCIETIES ACT., 1959,
OFFICE AT NO.19 ( NEW NO.32),
IST FLOOR, 10TH CROSS,
SAMPIGE ROAD, MALLESHWARAM
BENGALURU 560 003.
REP BY ITS PRESIDENT,
SRI. S SUBRAMANI
Digitally signed
...PETITIONER
by JUANITA (BY SRI. VENKATESH T S., ADVOCATE FOR
THEJESWINI SRI. MADHU J.A., ADVOCATE)
Location: HIGH
COURT OF
KARNATAKA AND:
1. M/S. ORNICA BUILDERS AND
DEVELOPERS PVT LTD
A COMPANY INCORPORATED UNDER
COMPANIES ACT,
HAVING ITS REGISTERED OFFICE
AT NO.9/494,
ELAMAKULATH BUILDING
KALLINGAL ROAD,
VAYYANANGUDI, TIRUR,
MALLAPURAM, KERALA -676101
-2-
NC: 2023:KHC:19382
C.M.P.No.510 of 2022
REPRESENTED BY ITS DIRECTORS
1. SRI MOHD IBRAHIM MUNDEKAT,
2. SRI. NISAMI VADAKKAEY PEEDIYAKKAL
3. SRI. ABDUL KHDER KAYINIKAR
4. SRI. BABU JI @ MODEEN KUTTY CHUNDAN
VEETIL KUTTIKKADAN MALIYAKKAL
ALSO AT;
M/S. ORNICA BUILDERS AND
DEVELOPERS PVT LTD.,
A COMPANY INCORPORATED
UNDER COMPANIES ACT,
HERITAGE HOMES, GC-3, FLOOR 23,
OMBR LAYOUT, KASTURI NAGAR,
CHIKKA BANASWADI,
BENGALURU 560 043.
REP BY ITS DIRECTOR,
SRI. MOHD IBRAHIM MUNDEKAT
...RESPONDENT
(V/O DTD. 24.05.2023 NOTICE TO RESPONDENT IS H/S)
THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER
SEC.11(5) & (6) OF THE ARBITRATION AND CONCILIATION
ACT, 1996, PRAYING THIS HONBLE COURT THAT AS PER THE
CLAUSE 12 OF MEMORANDUM OF UNDERSTANDINGS DATED
28/12/2009 (ANNEXURE-B) AND DATED 04/05/2012
(ANNEXURE-C), IF ANY DISPUTES ARISES BETWEEN THE
PARTIES, IN RESPECT OF THE SUBJECT MATTER OF THESE
DEEDS THE SAME WILL BE RESOLVED BY ARBITRATION AND
IN ACCORDANCE WITH THE ARBITRATION AND CONCILIATION
ACT, 1996, OR ANY LAW MODIFYING THE SAME AND
REPLACEMENT THEREOF AND THE COURTS IN BENGALURU
SHALL HAVE THE JURISDICTION AND ETC.
THIS CIVIL MISCELLANEOUS PETITION, COMING ON FOR
ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:
-3-
NC: 2023:KHC:19382
C.M.P.No.510 of 2022
ORDER
R.DEVDAS J., (ORAL):
This Civil Miscellaneous Petition is filed under Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as 'the Act' for short) seeking appointment of a sole Arbitrator in terms of the arbitration Clause contained in the Memorandum of Understanding (hereinafter referred to as 'MoU', for shot) dated 28.12.2009 and one more MoU dated 04.05.2012.
2. The petitioner is a Co-operative society, which entered into an agreement with the respondent-company seeking services of the respondent for acquisition of lands and development of a residential layout for the purpose of allotment of sites to the members of the society. The parties entered into a MoU dated 28.12.2009 at Annexure-B. However, due to escalation of the cost of lands and other material for development, at the mutual agreement of the parties, the parties herein entered into one more MoU dated 04.05.2012 at Annexure-C. -4- NC: 2023:KHC:19382 C.M.P.No.510 of 2022 Thereafter, by way of an acknowledgement made on the MoU, the parties renewed the MoU on 09.10.2015. However, the respondent failed to complete the project and handover the developed sites to the society.
3. Learned Counsel for the petitioner submits that there were several communications between the parties as could be seen at Annexures-D series, Annexures-F series and Annexure-G. Learned Counsel submits that in its communication dated 24.09.2021 at Annexure-G, the respondent has confirmed the payments made by the petitioner-society to the respondent-company. Nevertheless, unreasonable claims started to come from the respondent-company and therefore without having any further option, the petitioner-society invoked the arbitration clause contained in the MoU. Learned Counsel submits that in Clause-12 of the MoU dated 28.12.2009, provision is made for resolution of the dispute between parties through arbitration and in accordance with the provisions contained in the Act, 1996. Similarly, in the -5- NC: 2023:KHC:19382 C.M.P.No.510 of 2022 MoU dated 04.05.2012, in Clause-12, provision is made for resolution of the dispute under the provisions of the Act, 1996. Learned Counsel submits that a claim was raised on behalf of the petitioner-society on 25.09.2020. The respondent, in its communication dated 24.09.2021 acknowledged the receipt of Rs.21,85,80,000/- (Rupees Twenty one Crores Eighty five Lakhs and Eighty Thousands only) from the petitioner-society, but made unreasonable claims. Following the said communication dated 24.09.2021, the petitioner-society got issued a notice dated 22.09.2021 invoking the arbitration clause and called upon the respondent-company to come forward to appoint an arbitrator to resolve the dispute. When the respondent did not come forward to appoint an arbitrator, this Civil Miscellaneous Petition is filed.
4. Though notice is served on the respondent- company, it has remained unrepresented.
5. During the course of these proceedings, in the absence of the respondent-company, this Court posed -6- NC: 2023:KHC:19382 C.M.P.No.510 of 2022 certain questions to the learned Counsel for the petitioner, more particularly, having regard to the declaration of law made by the Hon'ble Supreme Court in the case of BHARATH SANCHAR NIGAM LIMITED AND ANOTHER VS. NORTEL NETWORKS INDIA PRIVATE LIMITED, (2021) 5 SCC 738.
6. When it was put to the learned Counsel for the petitioner that the Hon'ble Supreme Court has directed that when this Court is considering a petition under Section 11 of the Act, 1996, it is required to consider two types of limitations, one regarding the filing of the petition under Section 11 within a period of three years as prescribed under Article 137 of the Limitation Act, commencing from the date of issuance of the notice for arbitration. Second limitation is regarding the general limitation prescribed for recovery of money and institution of suits as regarding contracts. In the present case, the petitioner-society is well within the period of limitation as prescribed under Article 137, insofar as institution of this -7- NC: 2023:KHC:19382 C.M.P.No.510 of 2022 petition under Section 11 of the Act, 1996, from the date of issuance of notice of arbitration i.e., 22.09.2021. However, in respect of the other period of limitation, the learned Counsel has submitted that Section 18 of the Limitation Act deals with the effect of acknowledgement in writing. Learned Counsel submits that where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability has been made in writing, signed by the party against whom such right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment is signed. Therefore, it is submitted that having regard to the acknowledgement made by the respondent-company in writing on 24.09.2021, the petitioner-society is well within the period of limitation prescribed even in that regard.
7. Having heard the learned Counsel for the petitioner and on perusing the petition papers, this Court -8- NC: 2023:KHC:19382 C.M.P.No.510 of 2022 finds that in the absence of the respondent, the submission of the learned Counsel for the petitioner is required to be accepted. Moreover, having regard to the law laid down by the Hon'ble Supreme Court that even if there is the slightest doubt, the rule is to refer the disputes for arbitration, otherwise, it would encroach upon what is essentially a matter to be determined by the tribunal.
8. In that view of the matter, this Court proceeds to pass the following:
ORDER
(a) The petition is allowed appointing Hon'ble Shri. Justice L. Narayana Swamy, Former Chief Justice, High Court of Himachal Pradesh, as the sole arbitrator to enter reference of the disputes between the petitioner and the respondent and conduct proceedings at the Arbitration and Conciliation Centre -9- NC: 2023:KHC:19382 C.M.P.No.510 of 2022 (Domestic and International), Bengaluru according to the Rules governing the said Arbitration Centre.
(b) All contentions inter se parties are left open for adjudication in the arbitration proceedings.
(c) The office is directed to communicate this order to the Arbitration and Conciliation Centre and to Hon'ble Shri.Justice L.Narayana Swamy, Former Chief Justice, High Court of Himachal Pradesh, as required under the Arbitration and Conciliation Centre Rules, 2012.
Sd/-
JUDGE DL