Bangalore District Court
M/S. Ajmera Housing Corporation vs Sri. G.N. Chandrashekar Gowda on 4 December, 2020
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH84]
:Present:
Sri N.Sunil Kumar Singh, B.Com., LL.B.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 4th day of December 2020
COM.A.S.No.22/2016
Plaintiff M/s. Ajmera Housing Corporation
(Bengaluru)
A registered Partnership Firm,
Having its office at No. 3/D, Ajmera
Summit, 4th Floor, 7th "C" Main, 3rd
Cross, 3rd Block, Koramangala,
Bengaluru 560 034.
Rep. Herein by its P.A. Holder &
Chief Executive officer,
Sri. Deepak Mehta
[By Sri. N.M, Advocate]
/v e r s u s/
Defendants: 1. Sri. G.N. Chandrashekar Gowda,
S/o. G.R. Nanjundaiah,
Aged about 63 years,
R/at. No. 11/23, 3rd "B" Cross,
Roopa Nagar, BTM II Stage,
Bengaluru 560 076.
[By Sri. B.V.M.R, Advocate]
2
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2. Smt. Kanthamani,
W/o. G.N. Chandrashekar Gowda,
Aged about 55 years,
R/at. No. 11/23, 3rd "B" Cross,
Roopa Nagar, BTM II Stage,
Bengaluru 560 076.
[By Sri. B.V.M.R, Advocate]
3. Snt. Swetha
D/o. G.N. Chandrashekar Gowda,
Aged about 33 years,
R/at. No. 11/23, 3rd "B" Cross,
Roopa Nagar, BTM II Stage,
Bengaluru 560 076.
[By Sri. B.V.M.R, Advocate]
4. Sri. Hemanth
D/o. G.N. Chandrashekar Gowda,
Aged about 28 years,
R/at. No. 11/23, 3rd "B" Cross,
Roopa Nagar, BTM II Stage,
Bengaluru 560 076.
[By Sri. B.V.M.R, Advocate]
5. Sri. G.N. Srinivas,
S/o. G.R. Nanjundaiah,
Aged about 58 years,
R/at. No. 113, 8th Cross,
Bilekahalli, Dollars Colony,
BTM Layout, Bengaluru 560 076.
[By Sri. M.N, Advocate]
3
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6. Kum. Sonalini
D/o. G.N. Srinivas,
Aged about 25 years,
R/at. No. 113, 8th Cross,
Bilekahalli, Dollars Colony,
BTM Layout, Bengaluru 560 076.
[Exparte]
7. Sri. Varun S.Gowda,
S/o. G.N. Srinivas,
Aged about 23 years,
R/at. No. 113, 8th Cross,
Bilekahalli, Dollars Colony,
BTM Layout, Bengaluru 560 076.
[Exparte]
8. Smt. G.N. Pushpa,
D/o. G.R. Nanjundaiah,
W/o. M.Ramakrishna,
Aged about 64 years,
R/at. 59, Bull temple Road,
Sunkenahalli, Hanumantha Nagar,
Bengaluru 560 019.
[Exparte]
9. Smt. G.N. Jayamma,
D/o. G.R. Nanjundaiah,
W/o. M.C.Chandra Gowda,
Aged about 60 years,
R/at. No. 38, 10th Cross, K.R.Layout,
VI Phase, J.P.Nagar,
Bengaluru 560 078.
[Exparte]
4
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10. Smt. G.N. Sobha,
D/o. G.R.Nanjundaiah,
W/o. T.C. Srinivas,
Aged about 53 years,
R/at. No. 116, Appal By Markham,
Toronto, Canada
Rep. Herein by her Power of Attorney
holder Sri. G.N. Chandrashekar
Gowda, Sri. G.N. Srinivas
[Exparte]
11. Justice K.Shivashankar Bhat,
Former JudgeHigh Court,
No. 401/29, 12th Main,
RMV Extenstion,
Sadashivanagar,
Bengaluru 560 080.
Date of Institution of the suit : 01/02/2016
Nature of the suit : Arbitration Suit
Date of commencement of :
recording of the evidence
Date on which the Judgment : 04/12/2020
was pronounced.
: Year/s Month/s Day/s
Total duration
04 10 03
JUDGMENT
This suit is filed by plaintiff against the defendants U/S.34 of the Arbitration & Conciliation Act 1996 R/W Rule 4 of the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules 2001.
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2. The facts in brief of the plaintiff's case is that plaintiff is Registered Partnership Firm engaged in Real Estate Development business over a period of time and established enviable reputation in the business activities. The plaintiff is carrying on business in various cities like Mumbai, Pune, Rajkot and Ahmedabad. The plaintiff is known for its quality of construction and has established brand name in the country. The defendants No.1 to 10 are the land owners of Sy.Nos.15/4, 15/5, 15/6, 16/7, 16/8, 16/9, 21/1 (P), 21/2(P), 21/3, 21/4 and 20/2(P) situated at Kalena Agrahara village, Begur Hobli, Bannerghatta Road, Bengaluru South Taluk, measuring 4 acres 36.1 guntas. The defendants approached plaintiff with proposal to offer their property for Joint Development by the plaintiff herein. As per the said proposal plaintiff required to put up construction of residential apartments on the said properties at their cost and plaintiff is entitled for 64.229% undivided interest in the schedule properties together with corresponding construction put up and the defendants together are entitled for 35.701% undivided interest in the schedule properties along with corresponding construction putup on the schedule properties. The terms of agreement were reduced into writing as Joint Development Agreement dated 22/2/2005. The said Joint Development Agreement was registered in the office of Sub Registrar, Bengaluru South Taluk. At the time of 6 CT 1390_Com.A.S.222016_Judgment .doc entering into Joint Development Agreement, defendants have made following representations to the plaintiff.
"1) That they are the absolute owners of the Schedule Property having good, marketable and subsisting title and possession of the same;
2) That the Schedule Property is not subject to any litigation, attachments, court or acquisition proceedings of any kind that there are no mortgages, acquisition or requisition proceedings, charges, liens or encumbrances on the Schedule A Property.
3) That the Respondent have not entered into any Agreement of Sale, MOU, lease or transfer for development of the Schedule Property with any other person;
4) That the Respondents are in possession, enjoyment and personal occupation of the Schedule Property;
5) That there was no impediment for the Respondents to acquire, hold or to sell the Schedule Property under any law;
6) That the respondents will make available the entire Schedule Property as one clubbed property and fully vacant site for the development despite each of them having separate shares;
7) The Respondents had agreed to comply with the requirements of the developers and the obligations undertaken by the Respondents under the agreement that there are no pending proceedings on any forum or there 7 CT 1390_Com.A.S.222016_Judgment .doc is any threat or any proceedings concerning the Schedule A property etc."
3. In pursuance of the said Joint Development Agreement dated 22/2/2005, plaintiff was placed in possession of the properties by the defendants No.1 to 10 and defendants No.1 to 10 have executed Registered Power of Attorney dated 22/2/2005 in favour of the plaintiff to approach statutory authorities and to obtain required permissions and sanctions for development of the said properties. The plaintiff has paid amount of Rs.1,77,89,790/ to the defendants No.1 to 10 towards interest free refundable security deposit at the time of execution of Joint Development Agreement dated 22/2/2005. The details of payment made by plaintiff to the defendants No.1 to 10 is as follows:
Sl.No. Particulars Amount
1. By Demand Draft bearing Rs.85,85,230/
No.009506 dated 18/2/2005
issued by Kotak Mahindra Bank,
M.G.Road Branch, in favour of 1st
defendant.
2. By Demand Draft bearing Rs.79,26,140/
No.009507 dated 18/2/2005
issued by Kotak Mahindra Bank,
M.G.Road Branch, in favour of 5th
defendant.
8
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3. By Cheque bearing No.467809 Rs,.4,26,140/ dated 15/9/2004 drawn on HDFC Bank, Bengaluru in favour of the 8th defendant.
4. By Cheque bearing No.467810 Rs.4,26,140/ dated 15/9/2004 drawn on HDFC Bank, Bengaluru in favour of the 9th defendant.
5. By cheque bearing No.467811 Rs.4,26,140/ dated 15/9/2004 drawn on HDFC Bank, Bengaluru in favour of 10th defendant.
The defendants No.1 to 10 have admitted the receipt of above said sum from the plaintiff.
4. Later plaintiff have prepared necessary plans for construction of residential apartments and sent the same for approval of defendants No.1 to 10. On approval of plans by the defendants No.1 to 10, plaintiff and defendants No.1 to 10 have entered into an agreement allocating the area and identifying the apartments falling to their respective shares. In terms of the said agreement, defendants No.1 to 4 are entitled for 81428 sq.ft of super built up area, defendants No.5 to 7 are entitled for 83106 sq.ft of super built up area, defendants No.8 and 9 are entitled for 5135 sq.ft of super built up area and defendant No.10 was entitled for 5793 sq.ft of super built up area after construction of apartments. After 9 CT 1390_Com.A.S.222016_Judgment .doc selection and identification of apartments, it was found that super built up area allotted to the share of defendants No.1 to 4 was in excess by 84 square feet, the super built up area allotted to defendants No.5 to 7 was in excess by 204 square feet and the super built up area allotted to defendant No.8 was in excess by 109 square feet.
5. After execution of Joint Development Agreement and Power of Attorney in favour of plaintiff by defendants No.1 to 10 on 22/2/2005, plaintiff took possession of the properties and carried out developmental activities in terms of Joint Development Agreement by obtaining necessary permissions/sanctions from BESCOM, BWSSB, Airport Authorities of India, Fire Force, Pollution Control Board and thereafter applied for necessary plan sanction by the BDA vide L.P.No.07/200506 dated 22/7/2005. After sanctioning of plan by BDA, plaintiff has obtained construction license from Basavapura Grama Panchayath, Begur Hobli, Bengaluru South Taluk.
6. After obtaining all such permissions and construction license and approved plan, plaintiff started construction of apartments as per the Joint Development Agreement and received objection from one Sri.Narayanaraju who is claimed to be the predecessors in title of the defendants namely Hanumakka alleged to have been executed agreement of sale with respect to portion of property involved in Joint 10 CT 1390_Com.A.S.222016_Judgment .doc Development Agreement measuring 2 acres 09 guntas. After several proceedings in the courts and various authorities, the said proceedings initiated by Narayanaraju was compromised by the plaintiff on behalf of defendants No.1 to 10 on payment of Rs.65,00,000/ on behalf of 5th defendant. The 5th defendant has confirmed the amount paid by the plaintiff to Sri.Narayanaraju for compromising such matter. At the same time, plaintiff learnt that 5th defendant has entered into Memorandum of Understanding on 5/2/2003 with M/s.Puravankara Projects Limited with respect to portion of property measuring 1 acre 23 guntas in Sy.No.15/4 to 15/6 and 16/7 to 16/9. Thus M/s.Puravankara Projects Limited filed an application U/S.9 of the Arbitration & Conciliation Act 1996 before City Civil Court in A.A.No.51/2005 seeking an order to restrain 5th defendant or anybody claiming under him from alienating or encumbering the said properties till arbitration dispute was resolved between M/s.Puravankara Projects Limited and 5th defendant. Further M/s.Puravankara Projects Limited have initiated petition U/S.11 of the Arbitration & Conciliation Act 1996 before Hon'ble High Court of Karnataka for appointment of an Arbitrator to resolve the dispute between M/s. Puravankara Projects Limited and 5 th defendant and the said proceeding was carried upto Hon'ble Supreme Court of India. At that time defendants No.1 to 10 have requested the plaintiff to engage an advocate on behalf of 5th defendant to defend the case initiated by M/s. Puravankara Projects Limited and plaintiff herein has spent 11 CT 1390_Com.A.S.222016_Judgment .doc Rs.4,40,000/ towards advocate fee on behalf of defendants No.1 to 10 to defend the case initiated by M/s. Puravankara Projects Limited. The defendants No.1 to 10 herein have agreed to refund the said amount to the plaintiff and the plaintiff herein has informed defendants No.1 and 5 about settlement of disputes with Sri.Narayanaraju and pendency of proceedings initiated by M/s. Puravankara Projects Limited vide letter dated 16/1/2006.
7. During such proceedings, plaintiff commenced construction on the undisputed area and plaintiff could not able to commence construction on the disputed area with Sri.Narayanaraju and M/s. Puravankara Projects Limited. Anyhow the plaintiff was able to commence the developmental activities over entire property only after resolving the dispute with Sri.Narayanaraju and M/s. Puravankara Projects Limited and completed construction activities in April 2008. Upon completion of construction of apartments, plaintiff has obtained occupancy certificate from BDA, after obtaining completion certificate from Project Architect. Later BDA Authorities have inspected the constructed area and after verifying the apartments constructed by the plaintiff issued Occupancy Certificate on 31/12/2008.
8. The plaintiff totally constructed 354 residential apartments comprising 37 single bedroom apartments, 114 two bedroom apartments and 203 three bedroom apartments.
12CT 1390_Com.A.S.222016_Judgment .doc The apartment complex is divided into 'A' to 'G' Blocks. Out of which 'A' to 'D' and 'F' Blocks consisting of basement, ground plus fourteen upper floors, ground plus eight upper floors in 'E' Block and ground plus thirteen upper floors in 'G' Block. The plaintiff and defendants No.1 to 10 herein have also executed Registered Deed of Declaration dated 29/11/2007 as required under the provisions of Karnataka Apartment Ownership Act 1972 indicating the manner of sharing of the apartments between plaintiff and the defendants No.1 to 10 along with common areas and facilities. When the project was nearing for completion, plaintiff by its letter dated 6/7/2007 called defendants No.1 to 5 to pay their share of expenses incurred for obtaining Electricity and Water connection and also reimburse the deposits payable to BESCOM and BWSSB for obtaining the same. Subsequently on 10/12/2007, plaintiff wrote letter to 5th defendant who is representing all other defendants herein stating that the possession of approximately 1,25,446 sq.ft of constructed area falling to their share was ready to be handed over by the end of December 2007. The plaintiff also requested defendants No.1 to 10 to make payment of Rs.1,70,79,883/ towards refund of proportionate security deposit of Rs.1,30,46,383/ towards deposit charges and sum of Rs.43,20,000/ towards legal fees and expenses in all amounting to Rs.3,44,46,267/.
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9. Later the defendants No.1 and 5 have inspected apartments that fell to their share and they requested plaintiff to carryout certain modifications to the apartments which are fallen to their share and the said modifications were carried out by the plaintiff by incurring expenses of Rs.3,90,835/. Later plaintiff has called upon defendants No.1 to 10 to make payment of amount due towards refund of proportionate security deposit, proportionate amount towards deposit to BWSSB and BESCOM, legal fees, maintenance fees as per letter dated 18/12/2007. Later plaintiff sent letter on 5/4/2008 informing defendants No.1 and 5 that they will hand over possession of defendants share in 'A' and 'B' blocks and requested defendants No.1 to 10 to make payment of refundable security deposit, BESCOM & BWSSB expenses and maintenance charges. Alternatively plaintiff suggested that appropriate area be transfered to plaintiff at the rate of Rs.1,800/ per square feet for adjustment of the refundable security deposit in the event of defendants failed to refund the security deposit. Thereafter plaintiff requested the defendants No.1 to 10 to refund security deposit and make payment of amount due to the plaintiff. But defendants No.1 to 10 have not discharged their obligation and amount due were not refunded or repaid to the plaintiff. In the meanwhile 5th defendant requested the plaintiff to hand over one set of keys of apartments fallen to their share in 'F' & 'G' blocks for carrying out inspection. As per the request of 5 th defendant, plaintiff by their letter dated 12/12/2008 and 26/12/2008 14 CT 1390_Com.A.S.222016_Judgment .doc handed over two sets of keys of apartments fallen to the share of 5th defendant in 'F' and 'G' blocks for the purpose of inspection. Similarly 1st defendant by letter dated 27/12/2008 requested plaintiff to hand over keys of all the apartments that fallen to his share. Accordingly plaintiff vide letter dated 3/12/2008 handed over two sets of keys of apartments fallen to the share of 1st defendant. The keys that handed over to defendant No.1 were to be returned to the plaintiff after carrying such inspection. But defendant did not returned keys of apartments despite of repeated requests and demands by the plaintiff.
10. Later to resolve the dispute between plaintiff and defendants No.1 to 10 meeting was held on 1/2/2009, wherein plaintiff have called upon defendants No.1 to 10 to make payment of amount due and take possession of apartments fallen to their share in accordance with the Joint Development Agreement. In the said meeting 5 th defendant untenably contended that the terms of the Joint Development Agreement are violated and extra lands have been taken to the possession of plaintiff and this issue have been raised at belated point of time with malafide intention by the defendants No.1 to 10. But defendants No.1 to 10 have raised objections to delay or overcome the payment to be made by the defendants No.1 to 10 to the plaintiff. Immediately the plaintiff has appointed surveyor to survey the land and the said fact was informed to the 15 CT 1390_Com.A.S.222016_Judgment .doc defendants No.1 to 10 vide letter dated 4/2/2009. The plaintiff have informed defendants No.1 to 10 about completion of the entire project on receipt of occupancy certificate from BDA and once again called upon the defendants to make payment and to take possession of the apartments fallen to their share vide letter dated 9/2/2009. The surveyors appointed by plaintiff conducted survey to the extent of land used by the plaintiff for developmental activities and came to know that plaintiff have put up construction in 4 acres 35.81 guntas even though the project involved as per Joint Development Agreement in land measuring 4 acres 36.01 guntas and it is also found that the construction carried out by the plaintiff was in accordance with the agreement and sanction plan and there was no such encroachment made by the plaintiff or excess land was used for developmental activities. Later plaintiff vide letter dated 2/3/2009 requested defendants No.1 to 10 to take possession of apartments fallen to their share and make payment of amount outstanding to plaintiff.
11. Later plaintiff received legal notice addressed on behalf of defendant No.1 & 9 and alleged that plaintiff have encroached 4 guntas of land in Sy.No.20/2 and plaintiff have not paid amount for 46,000 sq.ft of land used for constructing labour sheds. The plaintiff has replied to the said legal notice on 26/3/2009 and called upon the defendants No.1 to 10 to make payment of outstanding amount and to take possession 16 CT 1390_Com.A.S.222016_Judgment .doc of their share of apartments or to adjust the amount outstanding towards constructed area fallen to their share at the rate of Rs.1,800/ per sq.ft. When the defendants No.1 to 10 have not responded the plaintiff has issued legal notice on 26/3/2009 appointing and nominating the retired judge of Hon'ble Supreme Court of India justice Sri. Shivaraj V Patil, as Arbitrator to resolve the dispute between plaintiff and defendants No.1 to 10. But defendants No.1 and 5 were trying to alienate the apartments fallen to their share without fulfilling their obligation to refund the security deposit. Thus plaintiff has filed arbitration application in A.A.No.7/2009 before this court U/S.9 of the Arbitration & Conciliation Act for interim measure restraining defendants from alienating or encumbering apartments fallen to their share. During pendency of said proceeding the defendants No.1 to 10 made part payment towards amount due to the plaintiff. Since defendants have not made entire payment due to the plaintiff and did not consent to appoint the Arbitrator, plaintiff has filed application U/S.11(5) and 11(6) of the Arbitration & Conciliation Act, 1996 for appointment of Arbitrator to resolve the dispute on the file of Hon'ble High Court of Karnataka in CMP No.65/2008 and said petition was allowed on 9/9/2010 and Hon'ble High Court of Karnataka constituted Arbitral Tribunal to resolve the dispute between plaintiff and defendants No.1 to 10.
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12. After appointment of such Arbitral Tribunal, plaintiff and defendants have appeared before the Arbitral Tribunal and putforth their claim. The plaintiff herein have putforth their claim before the Arbitral Tribunal as detailed below:
"i). for return of refundable security deposit as per Clause 11 of the JDA amounting to Rs. 45,85,230/ from the 1st respondent and a sum of Rs. 4,26,140/ from the 10th Respondent along with interest at 18% per annum from the expiry of 30 days from 09/02/2009 when the claimant informed the respondents that the development of the property is complete in all respects.
ii) for payment towards expenses and deposit as per Clause 18 of JDA. The Claimant is entitled to a sum of Rs.
71,99,724/ from respondents no. 1 to 4: Rs. 44,63,212/ from Respondents no. 5 to 7; Rs. 4,48,644/ from respondent no. 8; Rs. 2,95,572/ from respondent no. 9 and Rs. 5,06,100/ from respondent no. 10 along with interest at the rate of 18% p.a. until the date of payment.
iii) Settlement of claim made by Narayanraju amounting to Rs. 65,00,000/ along with interest at the rate of 18% p.a. for delay in payment, totally amounting to Rs. 1,34,22,500/.
iv) reimbursement of expenses incurred for defending litigation initiated against the 5th respondent by M/s. Puravankara Projects Ltd. The 5th respondent had in violation of the terms of the JDA entered into a MOU with M/s. Puravankara Projects Limited for joint development of a portion of the scheduled property 18 CT 1390_Com.A.S.222016_Judgment .doc measuring 1 acre 23 guntas and had failed to disclose the same to the claimant.
v) Payment of maintenance charges for use of common area and for facilities/amenities as per the terms of the JDA along with interest at the rate of 18% p.a until realization.
vi) Reimbursement of expenses incurred for carrying out the modifications to the apartments. The claimants had carried out certain modifications at the cost of the respondents amounting to Rs.3,90,835/. The respondents are liable to reimburse the claimant with interest at the rate of 18% p.a.
vii) Interest at 18% per annum and costs of these proceedings which have arisen due to the repeated breach of th terms of the JDA by the respondents."
13. Likewise defendants No.1 to 10 herein have also appeared before the Arbitral Tribunal and putforth their claim for awarding total sum of Rs.15 crores as detailed below:
"A) pass an award of Rs.3,59,37,000/ towards use of excess land in favour of respondent No.8 and against the claimant together with interest at 18% per annum from 15/4/2009 till the actual realization.
B) pass an award in a sum of Rs.60 lakhs for not providing electricity connection as per the Joint Development Agreement dated 22/2/2005 together with interest at 18% per annum from 15/4/2009 till the actual realization.19
CT 1390_Com.A.S.222016_Judgment .doc C) pass an award of Rs.4,34,34,000/ towards non utilization of maximum FAR available in favour of the respondents and against the claimant together with interest at 18% per annum from 15/4/2009 till the actual realization.
D) pass an award directing the claimant to pay betterment charges to the concerned local body/authority with respect to schedule property or in the alternative direct the claimant to pay Rs.40 lakhs to the respondents towards nonpayment of betterment charges to the local body.
E) pass an award directing the claimant to pay a sum of Rs.1,00,00,000/ to the respondents towards damages and mental agony.
F) pass an award directing the claimant to pay a sum of Rs.1,92,62,249/ towards arrears of rent in favour of respondents 1 and 5 and against the claimant together with interest at 18% per annum from 1/4/2012 till its actual realization.
G) pass an award in a sum of Rs.60 lakhs for not providing car parking space together with interest at 18% per annum from 15/4/2009 till the actual realization.
H) pass an award in a sum of Rs.60 lakhs for not removing debris together with interest at 18% per annum from 15/4/2009 till the actual realization.
I) pass an award in a sum of Rs.156 lakhs towards the expenses incurred to carry out interior works in the apartments in favour of the respondents and against the claimant together with interest at 18% per annum from 15/4/2009 till its actual realization.
20CT 1390_Com.A.S.222016_Judgment .doc J) pass an award directing the claimant to pay a sum of Rs.30,15,370/ towards interest on refundable deposit amount from 26/9/2004 in favour of the respondents and against claimant together with interest at 18% per annum from 1/3/2012 till its actual realization.
K) Direct the claimant to execute sale deed with respect to Apartment bearing No.702 in 'E' Block, Ahnera Green Acres, 20/1, Bannerghatta Road, Bengaluru560076 in favour of respondent No.5.
L) Direct the claimant to issue letter to handing over of the possession of the Apartments in favour of the respondents.
M) Direct the claimant to execute Sale Deed in respect of Apartment No.F1301 in favour of the respondents or int eh alternative direct the claimant to pay a sum of Rs.97,83,000/ to the respondents with interest @18% per annum from 15/4/2009 till actual realization.
N) pass an award in a sum of Rs.1.50 crores towards financial loss/opportunity loss suffered by the respondents in favour of the respondents and against the claimant.
O) pass an award directing the claimant to pay a sum of Rs.13,68,000/ for not providing rain water harvesting, commercial power connection for club house, etc. in favour of the respondents and against the claimant.
P) Direct the claimant to pay cost of the Arbitration proceedings and other consequential prayers."
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14. The Arbitral Tribunal after providing opportunity to both the sides and after recording of evidence and marking of documents, heard arguments of both the sides and passed an award on 31/10/2015 allowing some of the claims of plaintiff herein and disallowed some of the claims of plaintiff and also allowed some of the claims of defendants No.1 to 10 herein and rejected some of the claims of defendants.
15. Aggrieved by the said award passed by the Arbitral Tribunal, the plaintiff herein who was the claimant before the Arbitral Tribunal filed the present suit U/S.34 of Arbitration & Conciliation Act. Some of the main grounds are the Arbitral Tribunal has ignored several provisions of the agreement and findings of the Arbitral Tribunal are contrary to the terms of the agreement which are not sustainable. The Arbitral Tribunal has wholly disregarded the provisions of Section 73 and 74 of the Contract Act relating to the computation of damages and the scope of awarding damages which are in conflict with fundamental Indian Law, justice and morality. The Arbitral Tribunal has misdirected itself by not taking into consideration several material documents like letters of correspondences between parties and admissions of defendants in the cross examination by plaintiff. But Arbitral Tribunal has awarded excess compensation contrary to the substantive law of India. Thus the award is contrary to the public policy. The impugned award passed by the Arbitral Tribunal is in violation of provisions of the Indian Contract 22 CT 1390_Com.A.S.222016_Judgment .doc Act 1872 and opposed to the public interest and liable to be set aside. The learned Arbitrator has erred in awarding Rs.60,00,000/ as damages to the defendants for having not provided electricity of 5 KW to each of the apartments. The learned Arbitrator has failed to consider the fact that under Karnataka (Electricity Supply & Distribution) Code, 2001 the load will be sanctioned on the basis of the size of the apartment and after taking into consideration the size of each apartment, BESCOM has sanctioned load of 3 KW, 4 KW and 5 KW depending on the size of apartment which is not considered by the Arbitrator. The learned Arbitrator has erroneously awarding interest at 9% per annum on Rs.60,00,000/ from 22/2/2005 from the date of Joint Development Agreement which is erroneous and not sustainable. The learned Arbitrator erred in awarding sum of Rs.2,89,56,000/ payable to the defendants by plaintiff towards nonutilization of maximum FAR available for utilization by the plaintiff. The learned Arbitrator has mechanically awarded compensation at Rs.2,000/ per sq.ft of the super built up area even when no material was placed by the defendants to substantiate the claim for such compensation. The learned Arbitrator has committed error in accepting the contention of the defendants that the plaintiff has not utilized the remaining FAR of 40,555 sq.ft. The learned Arbitrator committed grave error in directing the plaintiff to execute sale deed with respect to F1301 in 'F' Block conveying the right, title and interest in Apartment 23 CT 1390_Com.A.S.222016_Judgment .doc No.E702. The learned Arbitrator has not assigned any reason for allotment and execution of conveyance deed with respect to Apartment No.F1301 and E702 in favour of defendants. The sole Arbitrator has erred in directing the plaintiff to issue letter of handing over 127 apartments in favour of defendants. It is also contended by the plaintiff that the award passed by the sole Arbitrator suffers from serious infirmities, unsustainable and liable to be set aside. It is also contended by the plaintiff that the award passed by the sole Arbitrator is opposed to the public policy and also opposed to morality and justice and liable to be set aside. Hence it is prayed to set aside the Arbitration Award passed by the sole Arbitrator dated 31/10/2015.
16. The brief averments of statement of objections filed by defendants No.1 to 10 in the present suit is that plaintiff has not made out any grounds to challenge the award passed by the sole Arbitrator. There is no such allegations whatsoever that the award was induced or effected by fraud or corruption. The grounds mentioned in the plaint do not discloses the conflict with public policy while passing award by the sole Arbitrator. While passing award the sole Arbitrator has not disregarded the law of the land and orders passed by the superior courts. The Arbitrator has not exceeded the limits prescribed under Arbitration & Conciliation Act while passing the award. The sole Arbitrator has provided justifiable reasons while passing award and 24 CT 1390_Com.A.S.222016_Judgment .doc award passed is not against to the public policy, morality or justice. The plaintiff has sought for reappreciation and reconsideration of facts which are already dealt by learned sole Arbitrator which is not permitted U/S.34 of Arbitration & Conciliation Act. After considering the evidence of both the sides, the learned Arbitrator has passed an award which cannot be set aside since it is not contrary to the provisions of the agreement alleged to have been executed by plaintiff and defendants No.1 to 10 herein. The learned Arbitrator has passed well reasoned award considering all the material evidence and documents on record. The learned Arbitrator has considered the relevant facts and awarded interest in accordance with law which cannot be considered as exceeding the limits of the sole Arbitrator. The learned sole Arbitrator has considered actual disputes with respect to each claims made by plaintiff and defendants No.1 to 10 herein and considered the same along with interest payable by adopting the scale for both the parties in accordance with law which cannot be opposed to the public policy as contended by the plaintiff. It is well established principles of law that when there are two views are possible, a particular view taken by the Arbitrator with well reasoned order, such view should not be disturbed under the proceedings initiated U/S.34 of the Arbitration & Conciliation Act 1996. The different view suggested by the plaintiff herein in the present suit cannot be the basis to set aside the award passed when admittedly the proceedings initiated U/S.34 of the Arbitration & Conciliation 25 CT 1390_Com.A.S.222016_Judgment .doc Act. There are no sufficient grounds made out by the plaintiff to set aside the Arbitral Award and there are no grounds to interfere with the award passed by the sole Arbitrator U/S.34 of the Arbitration & Conciliation Act. Hence it is prayed to dismiss the suit of the plaintiff with costs.
17. Heard arguments of both the sides and persued the LCR.
18. The points that arise for consideration are:
1. Whether the plaintiff made out sufficient grounds to set aside the Arbitral Award passed by the sole Arbitrator dated 31/10/2015 U/S.34 of Arbitration & Conciliation Act 1996 R/W Rule 4 of the High Court of Karnataka Arbitration (proceedings before the courts) Rules 2001?
2. What order?
19. My finding to the above points are as follows:
POINT No.1 : Negative.
POINT No.2 : As per final order for the following:
REASONS
20. POINT No.1 : The case of plaintiff is that plaintiff is Registered Partnership Firm engaged in Real Estate Development business over a period of time and established enviable reputation in the business activities. The plaintiff is carrying on business in various cities like Mumbai, Pune, 26 CT 1390_Com.A.S.222016_Judgment .doc Rajkot and Ahmedabad. The plaintiff is known for its quality of construction and has established brand name in the country. The defendants No.1 to 10 are the land owners of Sy.Nos.15/4, 15/5, 15/6, 16/7, 16/8, 16/9, 21/1 (P), 21/2(P), 21/3, 21/4 and 20/2(P) situated at Kalena Agrahara village, Begur Hobli, Bannerghatta Road, Bengaluru South Taluk, measuring 4 acres 36.1 guntas. The defendants approached plaintiff with proposal to offer their property for Joint Development by the plaintiff herein. As per the said proposal plaintiff required to put up construction of residential apartments on the said properties at their cost and plaintiff is entitled for 64.229% undivided interest in the schedule properties together with corresponding construction put up and the defendants together are entitled for 35.701% undivided interest in the schedule properties along with corresponding construction putup on the schedule properties. The terms of agreement were reduced into writing as Joint Development Agreement dated 22/2/2005. The said Joint Development Agreement was registered in the office of Sub Registrar, Bengaluru South Taluk. At the time of entering into Joint Development Agreement, defendants have made following representations to the plaintiff.
"1) That they are the absolute owners of the Schedule Property having good, marketable and subsisting title and possession of the same;
2) That the Schedule Property is not subject to any litigation, attachments, court or acquisition proceedings 27 CT 1390_Com.A.S.222016_Judgment .doc of any kind that there are no mortgages, acquisition or requisition proceedings, charges, liens or encumbrances on the Schedule A Property.
3) That the Respondent have not entered into any Agreement of Sale, MOU, lease or transfer for development of the Schedule Property with any other person;
4) That the Respondents are in possession, enjoyment and personal occupation of the Schedule Property;
5) That there was no impediment for the Respondents to acquire, hold or to sell the Schedule Property under any law;
6) That the respondents will make available the entire Schedule Property as one clubbed property and fully vacant site for the development despite each of them having separate shares;
7) The Respondents had agreed to comply with the requirements of the developers and the obligations undertaken by the Respondents under the agreement that there are no pending proceedings on any forum or there is any threat or any proceedings concerning the Schedule A property etc."
21. In pursuance of the said Joint Development Agreement dated 22/2/2005, plaintiff was placed in possession of the properties by the defendants No.1 to 10 and defendants No.1 to 10 have executed Registered Power of Attorney dated 22/2/2005 in favour of the plaintiff to 28 CT 1390_Com.A.S.222016_Judgment .doc approach statutory authorities and to obtain required permissions and sanctions for development of the said properties. The plaintiff has paid amount of Rs.1,77,89,790/ to the defendants No.1 to 10 towards interest free refundable security deposit at the time of execution of Joint Development Agreement dated 22/2/2005. The details of payment made by plaintiff to the defendants No.1 to 10 is as follows:
Sl.No. Particulars Amount
1. By Demand Draft bearing Rs.85,85,230/
No.009506 dated 18/2/2005
issued by Kotak Mahindra Bank,
M.G.Road Branch, in favour of 1st
defendant.
2. By Demand Draft bearing Rs.79,26,140/
No.009507 dated 18/2/2005
issued by Kotak Mahindra Bank,
M.G.Road Branch, in favour of 5th
defendant.
3. By Cheque bearing No.467809 Rs,.4,26,140/ dated 15/9/2004 drawn on HDFC Bank, Bengaluru in favour of the 8th defendant.
4. By Cheque bearing No.467810 Rs.4,26,140/ dated 15/9/2004 drawn on HDFC Bank, Bengaluru in favour of the 9th defendant.
29CT 1390_Com.A.S.222016_Judgment .doc
5. By cheque bearing No.467811 Rs.4,26,140/ dated 15/9/2004 drawn on HDFC Bank, Bengaluru in favour of 10th defendant.
The defendants No.1 to 10 have admitted the receipt of above said sum from the plaintiff.
22. Later plaintiff have prepared necessary plans for construction of residential apartments and sent the same for approval of defendants No.1 to 10. On approval of plans by the defendants No.1 to 10, plaintiff and defendants No.1 to 10 have entered into an agreement allocating the area and identifying the apartments falling to their respective shares. In terms of the said agreement, defendants No.1 to 4 are entitled for 81428 sq.ft of super built up area, defendants No.5 to 7 are entitled for 83106 sq.ft of super built up area, defendants No.8 and 9 are entitled for 5135 sq.ft of super built up area and defendant No.10 was entitled for 5793 sq.ft of super built up area after construction of apartments. After selection and identification of apartments, it was found that super built up area allotted to the share of defendants No.1 to 4 was in excess by 84 square feet, the super built up area allotted to defendants No.5 to 7 was in excess by 204 square feet and the super built up area allotted to defendant No.8 was in excess by 109 square feet.
30CT 1390_Com.A.S.222016_Judgment .doc
23. After execution of Joint Development Agreement and Power of Attorney in favour of plaintiff by defendants No.1 to 10 on 22/2/2005, plaintiff took possession of the properties and carried out developmental activities in terms of Joint Development Agreement by obtaining necessary permissions/sanctions from BESCOM, BWSSB, Airport Authorities of India, Fire Force, Pollution Control Board and thereafter applied for necessary plan sanction by the BDA vide L.P.No.07/200506 dated 22/7/2005. After sanctioning of plan by BDA, plaintiff has obtained construction license from Basavapura Grama Panchayath, Begur Hobli, Bengaluru South Taluk.
24. After obtaining all such permissions and construction license and approved plan, plaintiff started construction of apartments as per the Joint Development Agreement and received objection from one Sri.Narayanaraju who is claimed to be the predecessors in title of the defendants namely Hanumakka alleged to have been executed agreement of sale with respect to portion of property involved in Joint Development Agreement measuring 2 acres 09 guntas. After several proceedings in the courts and various authorities, the said proceedings initiated by Narayanaraju was compromised by the plaintiff on behalf of defendants No.1 to 10 on payment of Rs.65,00,000/ on behalf of 5 th defendant. The 5th defendant has confirmed the amount paid by the plaintiff to Sri.Narayanaraju for compromising such 31 CT 1390_Com.A.S.222016_Judgment .doc matter. At the same time, plaintiff learnt that 5 th defendant has entered into Memorandum of Understanding on 5/2/2003 with M/s.Puravankara Projects Limited with respect to portion of property measuring 1 acre 23 guntas in Sy.No.15/4 to 15/6 and 16/7 to 16/9. Thus M/s.Puravankara Projects Limited filed an application U/S.9 of the Arbitration & Conciliation Act 1996 before City Civil Court in A.A.No.51/2005 seeking an order to restrain 5th defendant or anybody claiming under him from alienating or encumbering the said properties till arbitration dispute was resolved between M/s.Puravankara Projects Limited and 5th defendant. Further M/s.Puravankara Projects Limited have initiated petition U/S.11 of the Arbitration & Conciliation Act 1996 before Hon'ble High Court of Karnataka for appointment of an Arbitrator to resolve the dispute between M/s. Puravankara Projects Limited and 5th defendant and the said proceeding was carried upto Hon'ble Supreme Court of India. At that time defendants No.1 to 10 have requested the plaintiff to engage the advocate on behalf of 5 th defendant to defend the case on initiated by M/s. Puravankara Projects Limited and plaintiff herein has spent Rs.4,40,000/ towards advocate fee on behalf of defendants No.1 to 10 to defend the case initiated by M/s. Puravankara Projects Limited. The defendants No.1 to 10 herein have agreed to refund the said amount to the plaintiff and the plaintiff herein has informed defendants No.1 and 5 about settlement of disputes with Sri.Narayanaraju and pendency of 32 CT 1390_Com.A.S.222016_Judgment .doc proceedings initiated by M/s. Puravankara Projects Limited vide letter dated 16/1/2006.
25. During such proceedings, plaintiff commenced construction on the undisputed area and plaintiff could not able to commence construction on the disputed area with Sri.Narayanaraju and M/s. Puravankara Projects Limited. Anyhow the plaintiff was able to commence the developmental activities over entire property only after resolving the dispute with Sri.Narayanaraju and M/s. Puravankara Projects Limited and completed construction activities in April 2008. Upon completion of construction of apartments, plaintiff has obtained occupancy certificate from BDA, after obtaining completion certificate from Project Architect. Later BDA Authorities have inspected the constructed area and after verifying the apartments constructed by the plaintiff issued Occupancy Certificate on 31/12/2008.
26. The plaintiff totally constructed 354 residential apartments comprising 37 single bedroom apartments, 114 two bedroom apartments and 203 three bedroom apartments. The apartment complex is divided into 'A' to 'G' Blocks. Out of which 'A' to 'D' and 'F' Blocks consisting of basement, ground plus fourteen upper floors, ground plus eight upper floors in 'E' Block and ground plus thirteen upper floors in 'G' Block. The plaintiff and defendants No.1 to 10 herein have also executed Registered Deed of Declaration 33 CT 1390_Com.A.S.222016_Judgment .doc dated 29/11/2007 as required under the provisions of Karnataka Apartment Ownership Act 1972 indicating the manner of sharing of the apartments between plaintiff and the defendants No.1 to 10 along with common areas and facilities. When the project was nearing for completion, plaintiff by its letter dated 6/7/2007 called defendants No.1 to 5 to pay their share of expenses incurred for obtaining Electricity and Water connection and also reimburse the deposits payable to BESCOM and BWSSB for obtaining the same. Subsequently on 10/12/2007, plaintiff wrote letter to 5th defendant who is representing all other defendants herein stating that the possession of approximately 1,25,446 sq.ft of constructed area falling to their share was ready to be handed over by the end of December 2007. The plaintiff also requested defendants No.1 to 10 to make payment of Rs.1,70,79,883/ towards refund of proportionate security deposit of Rs.1,30,46,383/ towards deposit charges and sum of Rs.43,20,000/ towards legal fees and expenses in all amounting to Rs.3,44,46,267/.
27. Later the defendants No.1 and 5 have inspected apartments that fell to their share and they requested plaintiff to carryout certain modifications to the apartments which are fallen to their share and the said modifications were carried out by the plaintiff by incurring expenses of Rs.3,90,835/. Later plaintiff has called upon defendants No.1 to 10 to make payment of amount due towards refund of proportionate 34 CT 1390_Com.A.S.222016_Judgment .doc security deposit, proportionate amount towards deposit to BWSSB and BESCOM, legal fees, maintenance fees as per letter dated 18/12/2007. Later plaintiff sent letter on 5/4/2008 informing defendants No.1 and 5 that they will hand over possession of defendants share in 'A' and 'B' blocks and requested defendants No.1 to 10 to make payment of refundable security deposit, BESCOM & BWSSB expenses and maintenance charges. Alternatively plaintiff suggested that appropriate area be transfered to plaintiff at the rate of Rs.1,800/ per square feet for adjustment of the refundable security deposit in the event of defendants failed to refund the security deposit. Thereafter plaintiff requested the defendants No.1 to 10 to refund security deposit and make payment of amount due to the plaintiff. But defendants No.1 to 10 have not discharged their obligation and amount due were not refunded or repaid to the plaintiff. In the meanwhile 5th defendant requested the plaintiff to hand over one set of keys of apartments fallen to their share in 'F' & 'G' blocks for carrying out inspection. As per the request of 5 th defendant, plaintiff by their letter dated 12/12/2008 and 26/12/2008 handed over two sets of keys of apartments fallen to the share of 5th defendant in 'F' and 'G' blocks for the purpose of inspection. Similarly 1st defendant by letter dated 27/12/2008 requested plaintiff to hand over keys of all the apartments that fallen to his share. Accordingly plaintiff vide letter dated 3/12/2008 handed over two sets of keys of apartments fallen to the share of 1st defendant. The keys that 35 CT 1390_Com.A.S.222016_Judgment .doc handed over to defendant No.1 were to be returned to the plaintiff after carrying such inspection. But defendant did not returned keys of apartments despite of repeated requests and demands by the plaintiff.
28. Later to resolve the dispute between plaintiff and defendants No.1 to 10 meeting was held on 1/2/2009, wherein plaintiff have called upon defendants No.1 to 10 to make payment of amount due and take possession of apartments fallen to their share in accordance with the Joint Development Agreement. In the said meeting 5 th defendant untenably contended that the terms of the Joint Development Agreement are violated and extra lands have been taken to the possession of plaintiff and this issue have been raised at belated point of time with malafide intention by the defendants No.1 to 10. But defendants No.1 to 10 have raised objections to delay or overcome the payment to be made by the defendants No.1 to 10 to the plaintiff. Immediately the plaintiff has appointed surveyor to survey the land and the said fact was informed to the defendants No.1 to 10 vide letter dated 4/2/2009. The plaintiff have informed defendants No.1 to 10 about completion of the entire project on receipt of occupancy certificate from BDA and once again called upon the defendants to make payment and to take possession of the apartments fallen to their share vide letter dated 9/2/2009. The surveyors appointed by plaintiff conducted survey to the extent of land used by the plaintiff 36 CT 1390_Com.A.S.222016_Judgment .doc for developmental activities and came to know that plaintiff have put up construction in 4 acres 35.81 guntas even though the project involved as per Joint Development Agreement in land measuring 4 acres 36.01 guntas and it is also found that the construction carried out by the plaintiff was in accordance with the agreement and sanction plan and there was no such encroachment made by the plaintiff or excess land was used for developmental activities. Later plaintiff vide letter dated 2/3/2009 requested defendants No.1 to 10 to take possession of apartments fallen to their share and make payment of amount outstanding to plaintiff.
29. Later plaintiff received legal notice addressed on behalf of defendant No.1 & 9 and alleged that plaintiff have encroached 4 guntas of land in Sy.No.20/2 and plaintiff have not paid amount for 46,000 sq.ft of land used for constructing labour sheds. The plaintiff has replied to the said legal notice on 26/3/2009 and called upon the defendants No.1 to 10 to make payment of outstanding amount and to take possession of their share of the apartments or to adjust the amount outstanding towards constructed area fallen to their share at the rate of Rs.1,800/ per sq.ft. When the defendants No.1 to 10 have not responded the plaintiff has issued legal notice on 26/3/2009 appointing and nominating the retired judge of Hon'ble Supreme Court of India justice Sri. Shivaraj V Patil, as Arbitrator to resolve the dispute between plaintiff and defendants No.1 to 10. But defendants No.1 and 5 were 37 CT 1390_Com.A.S.222016_Judgment .doc trying to alienate the apartments fallen to their share without fulfilling their obligation to refund the security deposit. Thus plaintiff has filed arbitration application in A.A.No.7/2009 before this court U/S.9 of the Arbitration & Conciliation Act for interim measure restraining defendants from alienating or encumbering apartments fallen to their share. During pendency of said proceeding the defendants No.1 to 10 made part payment towards amount due to the plaintiff. Since defendants have not made entire payment due to the plaintiff and did not consent to appoint the Arbitrator, plaintiff has filed application U/S.11(5) and 11(6) of the Arbitration & Conciliation Act, 1996 for appointment of Arbitrator to resolve the dispute on the file of Hon'ble High Court of Karnataka in CMP No.65/2008 and said petition was allowed on 9/9/2010 and Hon'ble High Court of Karnataka constituted Arbitral Tribunal to resolve the dispute between plaintiff and defendants No.1 to 10.
30. After appointment of such Arbitral Tribunal, plaintiff and defendants have appeared before the Arbitral Tribunal and putforth their claim. The plaintiff herein have putforth their claim before the Arbitral Tribunal as detailed below:
"i). for return of refundable security deposit as per Clause 11 of the JDA amounting to Rs. 45,85,230/ from the 1st respondent and a sum of Rs. 4,26,140/ from the 10th Respondent along with interest at 18% per annum from the expiry of 30 days from 09/02/2009 when the 38 CT 1390_Com.A.S.222016_Judgment .doc claimant informed the respondents that the development of the property is complete in all respects.
ii) for payment towards expenses and deposit as per Clause 18 of JDA. The Claimant is entitled to a sum of Rs.
71,99,724/ from respondents no. 1 to 4: Rs. 44,63,212/ from Respondents no. 5 to 7; Rs. 4,48,644/ from respondent no. 8; Rs. 2,95,572/ from respondent no. 9 and Rs. 5,06,100/ from respondent no. 10 along with interest at the rate of 18% p.a. until the date of payment.
iii) Settlement of claim made by Narayanraju amounting to Rs. 65,00,000/ along with interest at the rate of 18% p.a. for delay in payment, totally amounting to Rs. 1,34,22,500/.
iv) reimbursement of expenses incurred for defending litigation initiated against the 5th respondent by M/s. Puravankara Projects Ltd. The 5th respondent had in violation of the terms of the JDA entered into a MOU with M/s. Puravankara Projects Limited for joint development of a portion of the scheduled property measuring 1 acre 23 guntas and had failed to disclose the same to the claimant.
v) Payment of maintenance charges for use of common area and for facilities/amenities as per the terms of the JDA along with interest at the rate of 18% p.a until realization.
vi) Reimbursement of expenses incurred for carrying out the modifications to the apartments. The claimants had carried out certain modifications at the cost of the respondents amounting to Rs.3,90,835/. The respondents are liable to reimburse the claimant with interest at the rate of 18% p.a. 39 CT 1390_Com.A.S.222016_Judgment .doc
vii) Interest at 18% per annum and costs of these proceedings which have arisen due to the repeated breach of th terms of the JDA by the respondents."
31. Likewise defendants No.1 to 10 herein have also appeared before the Arbitral Tribunal and putforth their claim for awarding total sum of Rs.15 crores as detailed below:
"A) pass an award of Rs.3,59,37,000/ towards use of excess land in favour of respondent No.8 and against the claimant together with interest at 18% per annum from 15/4/2009 till the actual realization.
B) pass an award in a sum of Rs.60 lakhs for not providing electricity connection as per the Joint Development Agreement dated 22/2/2005 together with interest at 18% per annum from 15/4/2009 till the actual realization.
C) pass an award of Rs.4,34,34,000/ towards non utilization of maximum FAR available in favour of the respondents and against the claimant together with interest at 18% per annum from 15/4/2009 till the actual realization.
D) pass an award directing the claimant to pay betterment charges to the concerned local body/authority with respect to schedule property or in the alternative direct the claimant to pay Rs.40 lakhs to the respondents towards nonpayment of betterment charges to the local body.
E) pass an award directing the claimant to pay a sum of Rs.1,00,00,000/ to the respondents towards damages and mental agony.40
CT 1390_Com.A.S.222016_Judgment .doc F) pass an award directing the claimant to pay a sum of Rs.1,92,62,249/ towards arrears of rent in favour of respondents 1 and 5 and against the claimant together with interest at 18% per annum from 1/4/2012 till its actual realization.
G) pass an award in a sum of Rs.60 lakhs for not providing car parking space together with interest at 18% per annum from 15/4/2009 till the actual realization.
H) pass an award in a sum of Rs.60 lakhs for not removing debris together with interest at 18% per annum from 15/4/2009 till the actual realization.
I) pass an award in a sum of Rs.156 lakhs towards the expenses incurred to carry out interior works in the apartments in favour of the respondents and against the claimant together with interest at 18% per annum from 15/4/2009 till its actual realization.
J) pass an award directing the claimant to pay a sum of Rs.30,15,370/ towards interest on refundable deposit amount from 26/9/2004 in favour of the respondents and against claimant together with interest at 18% per annum from 1/3/2012 till its actual realization.
K) Direct the claimant to execute sale deed with respect to Apartment bearing No.702 in 'E' Block, Ahnera Green Acres, 20/1, Bannerghatta Road, Bengaluru560076 in favour of respondent No.5.
L) Direct the claimant to issue letter to handing over of the possession of the Apartments in favour of the respondents.
M) Direct the claimant to execute Sale Deed in respect of Apartment No.F1301 in favour of the 41 CT 1390_Com.A.S.222016_Judgment .doc respondents or int eh alternative direct the claimant to pay a sum of Rs.97,83,000/ to the respondents with interest @18% per annum from 15/4/2009 till actual realization.
N) pass an award in a sum of Rs.1.50 crores towards financial loss/opportunity loss suffered by the respondents in favour of the respondents and against the claimant.
O) pass an award directing the claimant to pay a sum of Rs.13,68,000/ for not providing rain water harvesting, commercial power connection for club house, etc. in favour of the respondents and against the claimant.
P) Direct the claimant to pay cost of the Arbitration proceedings and other consequential prayers."
32. The Arbitral Tribunal after providing opportunity to both the sides and after recording of evidence and marking of documents, heard arguments of both the sides and passed an award on 31/10/2015 allowing some of the claims of plaintiff herein and disallowed some of the claims of plaintiff and also allowed some of the claims of defendants No.1 to 10 herein and rejected some of the claims of defendants. Aggrieved by the said Arbitral Award, present suit is filed by plaintiff claiming that Arbitral Award is opposed to public policy as provided U/S.34 of Arbitration & Conciliation Act.
33. On going through the award passed by the sole Arbitrator and on hearing both the sides and on going 42 CT 1390_Com.A.S.222016_Judgment .doc through the evidence and documents produced before the sole Arbitrator by both the parties to the present suit, it is not in dispute that plaintiff is registered Partnership Firm which is carrying on business in Real Estate Development and it is also not in dispute that the defendants No.1 to 10 are the absolute owners of land bearing Sy.Nos.15/4, 15/5, 15/6, 16/7, 16/8, 16/9, 21/1 (P), 21/2(P), 21/3, 21/4 and 20/2(P) situated at Kalena Agrahara village, Begur Hobli, Bannerghatta Road, Bengaluru South Taluk, measuring 4 acres 36.1 guntas. It is also not in dispute that the defendants No.1 to 10 have approached plaintiff with proposal for Joint Development of the said land which was held by defendants No.1 to 10 herein and the said proposal was accepted by the plaintiff and as per the proposal 64.229% undivided interest in the suit properties together with corresponding construction will devolve upon the plaintiff and 35.701% of undivided interest in the suit properties along with corresponding construction shall devolve upon defendants No.1 to 10 and in this regard admittedly the plaintiff and defendants No.1 to 10 have entered into Joint Development Agreement dated 22/2/2015 which was registered in the office of Sub Registrar, Bengaluru South Taluk. It is also not in dispute that as per the terms of agreement, plaintiff has carried on construction of residential apartments and constructed totally 354 residential apartments comprising 37 single bedroom apartments, 114 two bedroom apartments and 203 three bedroom apartments 43 CT 1390_Com.A.S.222016_Judgment .doc and the apartments are divided into 'A' to 'G' Blocks and out of which 'A' to 'D' and 'F' Blocks consisting of basement, ground plus fourteen upper floors and 'E' Block consisting of ground plus eight upper floors and 'G' Block consisting of ground plus thirteen upper floors and it is also not in dispute that the defendants No.1 to 10 have also executed Registered Deed of Declaration on 29/11/2007 as required under the provisions of Karnataka Apartment Ownership Act of 1972 indicating the manner of sharing of the apartments between plaintiff and defendants No.1 to 10 herein.
34. But plaintiff herein has contended that after constructing the said apartments they have sent letter on 6/7/2007 calling upon defendants No.1 to 5 to pay the expenses incurred for obtaining Electricity and Water connection and reimbursement of deposits payable to BESCOM and BWSSB and also wrote letter on 10/12/2007 to the 5th defendant to take possession of approximately 1,25,446 sq.ft of constructed area since it was ready for occupation. It is also requested by plaintiff to the defendants for payment of Rs.1,70,79,883/ towards refund of proportionate security deposit and legal expenses incurred to resolve the dispute between some of the persons at the time of construction of the building and totally claimed Rs.3,44,46,267/ from the defendants. Despite of repeated demands and requests since defendants have not appeared before the plaintiff to take possession of the apartments by 44 CT 1390_Com.A.S.222016_Judgment .doc paying security deposit amount and other expenses incurred by the plaintiff towards obtaining permission of BWSSB and BESCOM, the plaintiff herein have filed CMP No.65/2008 for appointment of Arbitrator on the file of Hon'ble High Court of Karnataka which was allowed and sole Arbitrator was appointed to resolve the dispute between plaintiff and defendants herein. After adducing evidence by both the sides and after placing the relevant documents to prove the case of plaintiff and defendants, the sole Arbitrator has passed an award directing the defendants No.1 to 10 herein to pay Rs.45,85,230/ to the plaintiff along with interest @ 9% per annum from 1/1/2012. Likewise it was also directed defendant No.1 herein to pay interest @ 9% per annum on amount of Rs.85,85,230/ and directed to pay interest @ 9% per annum on 65,85,230/ from 20/6/2009 to 18/7/2009 and also directed to pay interest @ 9% per annum on Rs.45,85,230/ from 18/7/2009 to 31/12/2011 and directed defendant No.10 to pay Rs.4,26,140/ along with interest @ 9% per annum from 10/3/2009 till realization.
35. It was also directed by the Arbitrator to the defendants to pay Rs.50,65,520/ to the plaintiff along with interest @ 9% per annum from 10/3/2009 till the date of realization and also directed 5th defendant to pay Rs.3,50,976/ along with interest @ 9% per annum from 11/6/2009 to the plaintiff and also directed to pay interest @ 9% per annum on Rs.51,38,331/ from 10/3/2009 to 45 CT 1390_Com.A.S.222016_Judgment .doc 11/6/2009 and also directed to pay interest @9% per annum on Rs.3,15,653/ along with the said sum till realization and also directed 9th defendant to pay Rs.1,59,767/ along with interest @ 9% per annum from 20/6/2009 till realization and also directed to pay interest @9% per annum on Rs.3,22,331/ from 20/6/2009 and directed the 10 th defendant to pay Rs.3,56,077/ along with interest @ 9% per annum till the date of realization. It is also directed the defendants No.1 to 10 to pay Rs.35,00,000/ along with interest @ 9% per annum from 1/2/2006 till realization to the plaintiff and also directed to pay expenditure incurred by the plaintiff in defending litigation initiated against defendants by third parties and also directed to pay maintenance charges for use of common area and facilities by the defendants to the plaintiff. It was also directed the defendants No.1 to 10 to pay expenses incurred for carrying out modification of apartments by the plaintiff. It was also directed the defendants No.1 to 10 to hand over possession of apartment E802 in 'E' Block to the plaintiff. At the same time the sole Arbitrator has rejected the counter claims of defendants for illegal utilization of land belong to defendant No.8 and also rejected the counter claim for not providing electricity connection as per the Joint Development Agreement and also rejected some of the counter claims made by defendants were rejected.
36. But the counter claims made by defendants towards non utilization of maximum FAR was allowed and directed the 46 CT 1390_Com.A.S.222016_Judgment .doc plaintiff to pay Rs.2,89,56,000/ to the defendants along with interest @ 9% per annum from 15/4/2009 till realization. The counter claim made by the defendants towards non payment of betterment charges to local body, hardship and mental agony sustained by defendants, nonpayment of rents to the defendants and not providing car parking space to the defendants by the plaintiff, nonremoval of debris and mud stock on the property and incompleting the work and interest on the deposit amount of the agreement and other counter claims were rejected. It was also directed by the sole Arbitrator that plaintiff shall execute sale deed with respect to the apartment bearing No.F1301 of 'F' Block or in alternative it was also directed the plaintiff to pay sum of Rs.97,83,000/ along with interest @ 9% per annum from 15/4/2009 till realization and also directed to convey the title with respect to apartment No.E702 in favour of 5 th defendant and also directed to hand over possession of 127 apartments to the defendants. Aggrieved by the said award the present suit is filed by the plaintiff on various grounds which are mentioned in the present suit.
37. On going through the grounds which are taken by the plaintiff in the present suit to set aside the Arbitral Award it is pertinent to note that the plaintiff has contended that the sole Arbitrator has ignored several provisions of agreements and given finding which are contrary to the terms of the agreement which are not sustainable. But on going through 47 CT 1390_Com.A.S.222016_Judgment .doc the provisions of the agreement and also finding given by the sole Arbitrator there is no such provision of agreement are ignored while passing award by the sole Arbitrator. It is also contended by the plaintiff that the Arbitrator has disregarded the provision of Section 73 and 74 of the Contract Act relating to the computation of damages and the scope and extent of proof which is conflict with the fundamental policy of Indian Law. But admittedly the sole Arbitrator has discussed the provisions of law which are applicable to decide the matter in issue between parties to the present suit and given valid finding which cannot be held as opposed to the public policy, morality and justice as contended by the plaintiff. It is also the ground of the plaintiff that the Arbitrator has misdirected in not taking into consideration several material documents such as letters and correspondences which was taken place between plaintiff and defendants No.1 to 10 in the course of their transaction. But admittedly all the correspondences which are taken place between plaintiff and defendants have been produced and they were marked and considered and documents which are in existence between parties to the suit are appreciated by sole Arbitrator and given valid finding which cannot be held as opposed to the substantive law which is in force as on the date of passing of such award. It is also contended by the plaintiff in the ground that the award passed by the sole Arbitrator is in violation of provisions of Indian Contract Act and interest Act thereby it is opposed to the public policy. But the sole Arbitrator has appreciated the 48 CT 1390_Com.A.S.222016_Judgment .doc evidence and documents of both the sides and considered the violation of provisions of the agreement by the respective parties and considered their claim in accordance with law.
38. It is also contended by the plaintiff that the Arbitrator has erred in awarding Rs.60,00,000/ as damages for not having provided electricity connection of 5 KW to each of the apartment. But on going through the award passed by the sole Arbitrator, the Arbitrator has considered the relevant facts and matter in issue and considered the provisions of law U/S.73 and 74 of the Indian Contract Act and provided the damages towards cost of providing electricity connection of 5 KW to the each apartment which cannot be held as opposed to the public policy or exceeding the limits of sole Arbitrator. It is also contended by the plaintiff that the sole Arbitrator has erroneously awarded interest @ 9% per annum on all the amounts which are awarded to the defendants cannot be considered as exceeding the limits of sole Arbitrator, since the Arbitration & Conciliation Act Section 31(7)(a) & (b) provides discretionary power to the Arbitrator to award such interest which is prevalent on the date of award. Thus it cannot be held with such interest awarded by the sole Arbitrator is opposed to the public policy or opposed to the provisions of law which was prevailing at the relevant point of time. It is also contended by the plaintiff that the Arbitrator has erred in awarding sum of Rs.2,89,56,000/ to the defendants for non utilization of FAR available which cannot be held as exceeding 49 CT 1390_Com.A.S.222016_Judgment .doc the limits of sole Arbitrator or perverse as contended by the plaintiff, since the Arbitrator has considered all the relevant facts and considering the evidence of both the sides and awarded the said amount which cannot be held as opposed to the public policy and it cannot be set aside. While arguing the learned counsel for defendants relied upon decisions reported in (2015) 3 SCC 49 which is the case of Associate Builders v/s Delhi Development Authority, (2015) 14 SCC 21 which is the case of National Highways Authority of India v/s ITD Cementation India Limited, (2018) 14 SCC 688 which is the case of National Highways Authority of India v/s MVR (JV). I have gone through the principles laid down in the said decisions which are not applicable to the present facts and circumstances of this case. On going through the Arbitral Award and considering the evidence of both the sides admittedly some of the counter claims of the defendants were rejected and they have not preferred any appeal aggrieved by the said award and at the same time considering the claim of plaintiff also the Arbitrator has awarded substantial claim which are not questioned by the plaintiff in the present suit.
39. On perusal of the award passed by sole Arbitrator and evidence available on record it is pertinent to note that the sole Arbitrator has considered the evidence of both the sides and on going through the documents produced suitable 50 CT 1390_Com.A.S.222016_Judgment .doc award was passed in accordance with law and there is no sufficient ground to set aside the Arbitral Award passed by the sole Arbitrator as provided U/S.34 of the Arbitration & Conciliation Act. This court cannot examine the legality of award passed by the sole Arbitrator on going through the evidence and documents produced before the Arbitrator by the plaintiff and defendants herein and this court cannot reappreciate the evidence and documents placed before the sole Arbitrator by both the parties to the suit. If the finding given by the sole Arbitrator is opposed to the public policy or exceeding the limits of Arbitrator while passing such award or award passed by the Arbitrator is not considering the relevant clauses mentioned in the Joint Development Agreement as provided U/S.34 of the Arbitration & Conciliation Act then only this court can set aside the same. On perusal of Arbitral Award there is no such patent irregularity or opposed to the justice or morality and award passed is unfair or unreasonable as contended by the plaintiff.
40. In view of the above said discussion, I am of the opinion that plaintiff has not at all made out any cogent grounds to prove that impugned Arbitral Award is opposed to public policy or the Arbitrator has exceeded the limits in passing such award. Further the plaintiff has not at all made out cogent grounds to set aside the Arbitral Award and no grounds made out to show that learned Arbitrator was perverse, unfair or unreasonable in passing such award. The 51 CT 1390_Com.A.S.222016_Judgment .doc plaintiff has utterly failed to prove and establish that the award passed by the sole Arbitrator falls within any of the provisions prescribed U/S.34 of Arbitration & Conciliation Act 1996. On the other hand in the arguments of the defendants side they have specifically pleaded that the Arbitrator has considered all the material aspects and applied provisions of law to the facts and circumstances of this case and passed an award which is not opposed to the public policy as contended by the plaintiff. The materials placed before this court clearly discloses that the defendants are also not entitled for some of the counter claims which they have made before the sole Arbitrator and plaintiff also not entitle for some of the claims putforth before the sole Arbitrator and after considering the evidence of both the sides suitable claims which are applicable to both the parties to the suit were awarded which are not opposed to the public policy, morality or justice as contended by the plaintiff. Thus the present suit is deserves to be dismissed. Accordingly I hold point No.1 as negative.
41. POINT No.2 : In view of my discussion on point No.1 above, I proceed to pass following:
ORDER The suit filed by the plaintiff U/S.34 of Arbitration & Conciliation Act 1996 R/W Rule 4 of the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules 2001 is hereby dismissed.52
CT 1390_Com.A.S.222016_Judgment .doc In view of the circumstances of this case, the parties are directed to bear their own costs.
Draw decree accordingly.
Office is hereby directed to return LCR to the Arbitral Tribunal.
[Dictated to the Judgment Writer; transcript thereof corrected, initialed and then pronounced by me, in the Open Court on this the 4th day of December 2020] [N. Sunil Kumar Singh] LXXXIII Additional City Civil Judge.
BENGALURU.