Karnataka High Court
Mrs Tejal M Parikh vs Ms Fatima Naziruddin Bagwan on 26 May, 2023
Author: R. Devdas
Bench: R. Devdas
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 26TH DAY OF MAY, 2023
BEFORE
THE HON'BLE MR.JUSTICE R. DEVDAS
CIVIL MISCELLEANEOUS PETITION NO.735/2022
BETWEEN
1. MRS TEJAL M PARIKH
W/O LATE MILAN PARIKH
AGED 42 YEARS
2. MASTER KRISH PARIKH
S/O LATE MILAN PARIKH
AGED 8 YEARS
3. MASTER DAKSH PARIKH
S/O LATE MILAN PARIKH
AGED 6 YEARS
PETITIONERS NO.2 AND 3 BEING MINORS
ARE REP BY THEIR NEXT FRIEND /
NATURAL GUARDIAN MOTHER
MRS. TEJAL M PARIKH
ALL THE PETITIONERS ARE R/AT
1081/31, GOLDEN BLOSSOM APARTMENTS
FIRST FLOOR, 18TH A MAIN, 5TH BLOCK,
RAJAJINAGAR, BANGALORE - 560010
...PETITIONERS
(BY SRI ASHOK B PATIL, ADVOCATE FOR
SMT. ANUKANKSHA KALKERI .S, ADVOCATE)
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AND
1 . MS FATIMA NAZIRUDDIN BAGWAN
W/O SRI NAZIRUDDIN BAGWAN
AGED 46 YEARS
R/AT BAGWAN BUILDING
BEHIND HANS HOTEL
UNKAL CROSS, VIDYANAGAR
HUBLI - 580021
PAN. AGNPB2986M
2 . MR. RAHEES AHMED
S/O NAZIRUDDIN BAGWAN
AGED 30 YEARS
R/AT BAGWAN BUILDING
BEHIND HANS HOTEL
UNKAL CROSS, VIDYANAGAR
HUBLI - 580 021
PAN. NO. AJEPB0321L
...RESPONDENTS
(BY SRI. NANDISH PATIL, ADVOCATE)
THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER
SEC.11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996,
PRAYING THIS HON'BLE COURT TO A) APPOINT A RETIRED HONBLE
HIGH COURT JUDGE OF THIS HONBLE COURT TO ACT AS A SOLE
ARBITRATOR IN TERMS OF THE ARBITRATION CLAUSE 10
CONTAINED IN THE REGISTERED AGREEMENT OF SALE DATED
05/11/2015 AT ANNEXURE-D AND IN TERMS OF SECTION 11(6) OF
THE ARBITRATION AND CONCILIATION ACT, 1996 TO ENTER
REFERENCE AND ADJUDICATE THE DISPUTES AND DIFFERENCES
BETWEEN THE PARTIES AND ETC.,
THIS CIVIL MISCELLEANEOUS PETITION HAVING BEEN
HEARD AND RESERVED ON 03.02.2023 AND COMING ON FOR
PRONOUNCEMENT OF ORDERS, THIS DAY, THE COURT MADE THE
FOLLOWING:
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ORDER
This Civil Miscellaneous Petition is filed under Section 11(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 registered Agreement of Sale dated 05.11.2015.
2. It is the contention of the petitioners that late Sri Milan M.Parikh, the husband of the first petitioner and father of the other two minor petitioners had entered into an agreement with the respondents. The respondents who owned various pieces of lands had earlier entered into a Joint Development Agreement with M/s.Golden Home Shelters Pvt. Ltd., a Company registered under the Companies Act, 1956, represented by its Managing Director, Sri Milan M.Parikh, to develop immovable property bearing CTS No.4/B and 5A/1, measuring about 4 acres 25 1/9 sq. yards, situated at Karwar Road, Hubli. In terms of a registered Deed of Declaration -4- dated 05.11.2015, 23% of the built area approximately numbering 81 flats were identified to the share of the owners/respondents herein. The remaining 77% of the built- up area numbering approximately 282 flats were identified to the share of the developer.
3. On the same day, when the Deed of Declaration dated 05.11.2015 was registered, the respondents herein entered into an agreement of sale on 05.11.2015 offering 29 apartments to Sri Milan M.Parikh, Proprietor of Golden Home Trading Corporation, admitting the fact that in an independent transaction, the respondents herein owed a sum of Rs.5,50,00,000/- to Sri Milan M.Parikh, Proprietor, Golden Home Trading Corporation. It was stated in the agreement that in lieu of the said sum of Rs.5,50,00,000/- the respondents came forward to register 29 apartments which had fallen to their share in the Deed of Declaration dated 05.11.2015. However, it was also agreed that if the respondents herein did not repay the said sum of -5- Rs.5,50,00,000/- within 90 days from the date of execution of the Agreement of Sale dated 05.11.2015, they should execute sale deeds conveying the 29 flats in favour of Sri Milan M.Parikh, considering the fact that the entire sale consideration of Rs.5,50,00,000/- at the rate of Rs.1,700/- per sq. ft. was already paid by Sri Milan M.Parikh. The agreement provided for extension of the period within which the respondents could repay the entire amount along with an additional sum of Rs.99,00,000/- within 90 days from the date of execution of the agreement of sale. The agreement also provided for a further extension of 180 days, subject to the respondents herein paying an additional sum of Rs.2,31,00,000/- within the extended period. In all, the agreement provided for 360 days to the respondents to repay the said sum of Rs.5,50,00,000/- along with the additional sum mentioned therein. Paragraph-6 of the Agreement of Sale makes it clear that after the expiry of 360 days, and on failure of the respondents to fulfill the conditions stipulated in -6- the agreement, Sri Milan M.Parikh, could call upon the respondents to execute Deed of Conveyance either in his favour or in favour of his nominees, within 7 days from the date of expiry of the 360 days which were provided in the agreement. The agreement contains an arbitration clause in paragraph-10.
4. It is stated in the petition that Sri Milan M.Parikh, was under clinical depression in the year 2018 and he passed away on 08.05.2021. Thereafter, petitioner No.1, Smt.Tejal M.Parikh, entered into a Memorandum of Understanding (MoU) on 16.09.2021, without understanding the implications of the agreement and the terms and conditions stipulated therein. It is stated that in the MoU dated 16.09.2021, petitioner No.1 has given up the claims of her husband in the Agreement of Sale dated 05.11.2015 and agreed to cancel the Agreement of Sale dated 05.11.2015. It was agreed that the respondents herein shall pay off the loan outstanding amount of Rs.3,55,00,000/-, which was a liability on the project Golden -7- Heights, wherein 22 flats were mortgaged. However, it is contended that the first petitioner was tricked into signing the MoU. It is contended that the minors interest could not have been represented by the mother and it is not particularly stated in the agreement that the minors interest was represented in particular by a guardian.
5. It is stated in the petition that having realized the fraud played by the respondents on the petitioners, the petitioners issued a legal notice dated 25.07.2022 to the respondents demanding refund of Rs.7.81 crores together with interest at the rate of 24% per annum or in the alternative, to execute sale deeds in respect of 29 apartments as provided in Schedule-B of the agreement of sale dated 05.11.2015. Thereafter the petitioners got issued another legal notice dated 25.07.2022 proposing the names of the sole Arbitrators and called upon the respondents to appoint an Arbitrator to decide the lis between the parties.
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6. The respondents have filed statement of objections, at the threshold contending that the cause of action for invoking the arbitration clause arose immediately after lapse of 360 days from the date of the agreement of sale i.e., on 06.11.2016 and the notice for arbitration was issued by the respondents long after the expiry of the period of limitation and consequently, opposed the petition on the ground of delay and laches. It is contended that in terms of Article 137 of the Schedule to the Limitation Act, 1963, the petitioners must have invoked the arbitration clause and sought for an appointment of an Arbitrator within a period of three years from the date when the right to seek adjudication accrued under the Agreement of Sale. Many other contentions have also been raised including the contentions that this petition has been filed in the individual capacity and not on behalf of the Company which had entered into the Agreement of Sale and therefore, the Civil Miscellaneous Petition is not maintainable.
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7. On the question of delay and laches, learned Counsel for the petitioners Sri Ashok B.Patil, seeks to contend that since admittedly the entire sale consideration under the Agreement of Sale dated 05.11.2015 was already paid by Sri Milan M.Parikh, Article 62 of the Limitation Act, 1963, would apply and the period of limitation is twelve years and not three years and therefore, the invocation of the Arbitration Clause and filing of this Civil Miscellaneous Petition is within the prescribed period of limitation. In this regard, learned Counsel for the petitioners seeks to place reliance on a decision of the Hon'ble Supreme Court in the case of DELHI DEVELOPMENT AUTHORITY VS. SKIPPER CONSTRUCTION CO. (P) LTD. AND OTHERS, (2000) 10 SCC 130.
8. In this regard, learned Counsel for the respondents draws the attention of this Court to paragraph-6 of the Agreement of Sale and submits that the parties to the agreement have clearly agreed that the second party therein viz., Milan M.Parikh was entitled to sue for specific -10- performance of the agreement. Moreover, it is submitted that the agreement of sale dated 05.11.2015 stands cancelled by a novation, by virtue of the fact that a Memorandum of Understanding was admittedly entered into on 16.09.2021. Learned Counsel submits that in terms of the MoU, the respondents have taken up the liability on behalf of Sri Milan M.Parikh, to discharge the outstanding debts standing in the name of Sri Milan M.Parikh, Proprietor of M/s.Golden Home Trading Corporation. In terms of the MoU, the respondent has agreed and issued cheques in favour of petitioner No.1 herein to an extent of Rs.3,00,00,000/- in addition a sum of Rs.1,00,00,000/- each has been deposited in the name of the minor petitioners No.2 and 3 herein, in terms of the MoU. It is therefore contended that in view of novation of the contract, it is legally impermissible for the petitioners to invoke the arbitration clause under the Agreement of Sale dated 05.11.2015.
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9. Having heard the learned Counsels on both the sides and having perused the material available on record, this Court is of the considered opinion that the serious objections raised at the hands of the respondents regarding maintainability of the Civil Miscellaneous Petition and the question of delay and laches, the law of limitation, requires consideration.
10. Learned Counsel for the petitioners seeks to place reliance on MEENAKSHI SOLAR POWER PVT. LTD. VS. ABHYUDAYA GREEN ECONOMIC ZONES PVT. LTD. AND OTHERS, 2022 SCC ONLINE SC 1616, to contend that in a petition under Section 11(6) of the Act, the High Court is not required to give a finding regarding novation of an agreement, since the said aspect would have bearing on the merits of the controversy and such issues are required to be decided by the Arbitral Tribunal. Upholding such an argument, the Hon'ble Supreme Court set aside the decision of the High Court which had dismissed the petition filed under Section 11(6) of the Act. -12-
11. However, even if such an argument is required to be accepted, nevertheless, it is noticeable that in the present set of facts, on a plain reading of the Agreement of Sale dated 05.11.2015, the cause of action for invoking the arbitration clause commenced on 06.11.2016 and from that date, the aggrieved party was required to initiate proceedings invoking the arbitration clause within a period of three years as provided in Article 137 of 1st Schedule of the Limitation Act. The contention of the learned Counsel for the petitioners that Article 62 would apply and not Article 137, cannot be countenanced. As rightly pointed out by the learned Counsel for the respondents, in the agreement of sale, it is clearly provided that Sri. Milan M.Parikh, the second party therein is entitled to sue for specific performance of the contract on failure of the first party to repay the amount within the stipulated time. Admittedly, Sri. Milan M Parikh, died on 08.05.2021. The period of three years as contemplated under Article 137 came to an end on 04.11.2019, during the lifetime -13- of Sri.Milan M Parikh. He did not take action within the prescribed period. Therefore, in terms of the decision of 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, since the case on hand is ex facie time barred, this petition cannot be entertained. No explanation is sought to be offered by the petitioners to convince this Court of any intervening facts which would extend the period of limitation falling within Sections 5 to 20 of the Limitation Act.
12. Article 62 of the 1st Schedule of the Limitation Act, 1963, pertains to suits relating to immovable property and more particularly, suit by a mortgagor. It provides, to enforce payment of money secured by a mortgage or otherwise charged upon immovable property, the period of limitation would be 12 years and time commences when the money sued for becomes due. On a plain reading of the contents of the agreement of sale dated 05.11.2015, it is difficult to -14- comprehend or accept the submission of the learned Counsel for the petitioners that the property in question can be considered as mortgage. It is definitely not a case where the petitioners could urge that a charge was created on the immovable property.
13. For the reasons stated above, this Court is of the considered opinion that the respondents have made out a case to reject the petition on the ground that the claim of the petitioners arising out of agreement of sale dated 05.11.2015 is a dead claim. Consequently, the Civil Miscellaneous Petition stands dismissed.
Pending I.As., if any, stand disposed of.
Sd/-
JUDGE JT/DL