Karnataka High Court
Sri. B. Prasannaiah vs Smt. Sujatha Ashok on 7 February, 2023
Author: R Devdas
Bench: R Devdas
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CMP No. 722 of 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF FEBRUARY, 2023
BEFORE
THE HON'BLE MR JUSTICE R DEVDAS
CIVIL MISC. PETITION NO. 722 OF 2022
BETWEEN:
1. SRI. B. PRASANNAIAH
S/O LATE. BRAHAMASURAIAH
AGED ABOUT 74 YEARS
MANAGING DIRECTOR
ASTIVA PROMOTERS AND
DEVELOPERS PVT LTD
RA/T NO 291, 2ND MAIN
3RD PHASE, J P NAGAR
BENGALURU 560078
2. SRI. PRAMOD KUMAR P LAXMIN
S/O LATE. BRAHAMASURAIAH
AGED ABOUT 41 YEARS
Digitally
signed by DIRECTOR
JUANITA ASTIVA PROMOTERS AND
THEJESWINI
Location: DEVELOPERS PVT LTD
HIGH RA/T NO 291, 2ND MAIN
COURT OF
KARNATAKA 3RD PHASE, J P NAGAR
BENGALURU 560078.
(PETITIONER NO.2 DELETED VIDE COURT ORDER
DATED 02.09.2022)
...PETITIONER
(BY SRI. UDAYA HOLLA, SENIOR COUNSEL FOR
SRI. CHANDRACHUD A., ADVOCATE)
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CMP No. 722 of 2022
AND:
1. SMT. SUJATHA ASHOK
W/O LATE A V ASHOK
AGED ABOUT 52 YEARS
2. MR. SUHAS.A
S/O LATE A V ASHOK
AGED ABOUT 34 YEARS
3. MISS. RAKSHITHA
D/O LATE A V ASHOK
AGED ABOUT 29 YEARS
SL. NOS. 1 TO 3 ARE
R/AT NO 216, 217
CLOUD 9 HOTEL RESORT
ALSO CALLED AS MANASWINI
ENTERPRISES, KURUBARAHALLI
CHAMUNDI HILL ROAD
OPP J C NAGAR, MYSURU 570011
...RESPONDENTS
(BY SRI. YASHODAR SHETTY., &
SRI. S. NATARAJA BALLAL, ADVOCATES)
THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER
SEC.11 (4) AND (5) OF THE ARBITRATION AND CONCILIATION
ACT 1996, PRAYING TO ISSUE NOTICE TO RESPONDENTS AND
AFTER HEARING THE PARTIES REFER THE MATTER IN DISPUTE
BETWEEN THE PARTIES BY VIRTUE OF CLAUSE NO.8.1 OF THE
AGREEMENT OF SELL DATED 21/10/2010 BY REFERRING THE
MATTER TO ARBITRATION BY APPOINTING AN ARBITRATOR
AND ETC.
THIS PETITION COMING ON FOR ADMISSION, THIS DAY,
THE COURT MADE THE FOLLOWING:
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CMP No. 722 of 2022
ORDER
R.DEVDAS J., (ORAL):
This Civil Miscellaneous Petition is filed under Section 11(4) and (5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act', for short), seeking appointment of an arbitrator to resolve the dispute between the parties under the 'Agreement of Sale' dated 21.10.2010.
2. It is not disputed at the hands of the respondents that Sri.A.V.Ashok entered into an agreement with the petitioner-Sri.B.Prasannaiah along with two other persons viz., Sri.H.R.Vishwanath and Sri.M.V.Shashidhar. The respondents are the legal heirs of Sri.A.V.Ashok, the owner of the land which is the subject matter of the Agreement of Sale. It is the contention of the petitioner that Sri.H.R.Vishwanath and Sri.M.V.Shashidhar who had jointly entered into an agreement along with Sri.B.Prasannaiah to purchase the land, executed a Deed of Assignment dated 22.03.2012 assigning their rights in -4- CMP No. 722 of 2022 favour of Sri.B.Prasannaiah. Since, Sri.H.R.Vishwanath and Sri.M.V.Shashidhar are not before this Court making any claim, this Court need not look into the claim of the said two parties.
3. The objections sought to be raised at the hands of respondents is that this Civil Miscellaneous Petition which is filed on 18.08.2022 is hopelessly time barred and therefore, the petition cannot be entertained and the same is required to be dismissed. In this regard, learned Counsel for the respondents seeks to place reliance on a decision of the Hon'ble Supreme Court in the case of BHARAT SANCHAR NIGAM LIMITED AND ANOTHER VS. NORTEL NETWORKS INDIA PRIVATE LIMITED, (2015) 5 SCC 738. Learned Counsel submits that the agreement was entered into on 21.10.2010 and in Clause (3) it was made clear that sale shall be completed after the receipts of NOC from Karnataka State Industrial Investment and Development Corporation Ltd., (KSIIDC). However, learned Counsel for the respondents submits that the -5- CMP No. 722 of 2022 petitioner herein filed an Application in A.A.No.19/2011 before the Principal District and Sessions Judge, Mysuru, seeking an order of injunction restraining the respondents from alienating the property in question or creating any encumbrance on the property which is the subject matter of the Agreement of Sale dated 21.10.2010. Learned Counsel submits that the said Application was allowed by the District Judge by order dated 07.09.2011 restraining the respondents by an order of injunction from alienating, parting or encumbering the schedule property.
4. Learned Counsel for the respondents would draw the attention of this Court to sub-section (2) of Section 9 and submits that the provision makes it very clear that whenever a party to the contract files an application under Section 9 before commencement of the arbitral proceedings and court passes an order for any interim measure of protection under sub-section(1), the arbitral proceedings is required to be commenced within a period of ninety days from the date of such order or within such -6- CMP No. 722 of 2022 further time as the Court may determine. It is therefore sought to be contended by the learned Counsel that the time for commencement of the arbitral proceedings commenced on 07.09.2011 and from that date within ninety days the arbitral proceedings should have been commenced by the petitioner.
4. Per contra, learned Senior Counsel Sri.Udaya Holla, appearing for the petitioner submits that in the order passed by the District Judge in A.A.No.19/2011 on 07.09.2011, it was also made clear that the restraint order passed against the respondents was to continue till the adjudication of the arbitration dispute. Learned Senior Counsel submits that the respondents cannot dispute the fact that the parties again sought to sort-out the problem regarding the NOC to be received from the KSIIDC and therefore, they jointly approached the KSIIDC and gave a written representation on 30.03.2012, seeking the permission of the KSIIDC to sell and register the land in question i.e., 3 acres in Sy.No.4, Block-A and Khatha -7- CMP No. 722 of 2022 No.216 situated at Kurubarahalli village, Kasaba Hobli, Chamundi Hill Road, Mysuru, so as to facilitate the parities to clear the OTS dues. Learned Senior Counsel would therefore submit that although the words employed in sub-section (2) of Section 9 is that the parties are required to initiate the arbitration proceedings within a period of ninety days from such an order passed under sub-section (1) of Section 9, nevertheless, by their very conduct the parties have consented to amicably settle the matter and therefore, they approached the KSIIDC seeking the NOC, which would enable the parties to complete the transactions, even as per the terms and conditions of the contract.
6. Further, the learned Senior Counsel would submit that the respondents filed a suit in O.S.No.733/2020 on the file of I Addl. I Civil Judge and JMFC, Mysuru, against the petitioner and his son-Sri.Pramod Kumar P Laxmin, seeking permanent injunction retraining the defendants from interfering with the peaceful possession and -8- CMP No. 722 of 2022 enjoyment of the suit schedule property. The petitioner herein filed an application under order VII Rule 11(d) of CPC read with Section 5 of the Arbitration and Conciliation Act, 1996, and sought rejection of the plaint. The civil court allowed the application and retuned the plaint to the plaintiffs with a direction to present the same before the proper forum. Learned Senior Counsel submits that the order of the civil court was challenged by the respondents by filing a Miscellaneous Petition in M.A.No.71/2020 before the I Addl. Senior Civil Judge and CJM., Mysuru and the said appeal was also dismissed by order dated 26.08.2021, wherein it was clearly directed that in view of the arbitration clause contained in the Agreement of Sale and also as per the order in arbitration Application in A.A.No.19/2011, both the parties have to approach the arbitrator for resolving their dispute. Learned Senior Counsel submits that after the order was passed by the learned Senior Civil Judge, in M.A.No.71/2020, the petitioner got issued a notice of arbitration on 28.07.2022 calling upon the respondents to agree for appointment of a -9- CMP No. 722 of 2022 sole arbitrator. Learned Senior Counsel submits that for the reasons stated above, the objections raised at the hands of the respondents regarding the Civil Miscellaneous Petition being hit by the law of limitation should not be accepted. Learned Senior Counsel would also submit that the respondents cannot dispute the fact that on account of certain entries made in the land records by the Deputy Commissioner, Mysuru District, the parties were not in a position to have the sale deed registered even though, an NOC was received from the KSIIDC.
7. Learned Senior Counsel would hasten to add that the respondents never revealed to the petitioner that they had obtained an NOC at the hands of KSIIDC. Nevertheless, it is also an undisputed fact that the orders passed by the Deputy Commissioner were challenged by various persons including the respondents and unless the said entry made in the land records showing the name of the Government was got removed by the respondents, it was impermissible for the parties to going for the
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CMP No. 722 of 2022registration of the document. At this juncture, learned Counsel for the respondents would raise objections that the entry made in the land records, at the instance of the Deputy Commissioner never came in the way of the petitioner to get the sale deed registered. Learned Counsel for the respondents submits that earlier the learned Counsel for the petitioner had contended that there was a bar created by virtue of various orders/circulars issued by the Government and such an argument is not supported by placing material evidence before this Court.
8. Learned Senior Counsel would also place reliance on the following decisions;
(i) BHARAT SANCHAR NIGAM LIMITED AND ANOTHER VS. NORTEL NETWORKS INDIA PRIVATE LIMITED, (2015) 5 SCC 738 and
(ii) SANJIV PRAKASH VS. SEEMA KUKREJA AND OTHERS (2021) 9 SCC 732.
9. Heard the learned Senior Counsel appearing for the petitioner, learned Counsel for the respondents and perused the petition papers.
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CMP No. 722 of 2022
10. What requires consideration in this Civil Miscellaneous Petition is whether the petition is barred by limitation and if so, whether the prayer made in the writ petition is required to be rejected or not?
11. Two provisions contained in the Arbitration and Conciliation Act, 1996, would be relevant for decision making; sub-section (2) of Section 9, in the present facts and circumstances and Section 21. Section 21 provides that unless otherwise agreed by the parties the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. In this regard, both the learned Counsels have relied upon the same judgment of the Hon'ble Supreme Court i.e., BHARAT SANCHAR NIGAM LIMITED (supra). In the said decision, the Hon'ble Supreme Court has noticed that there are two parts to the law of limitation that would require consideration for an application under Section 11 of the Act.
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CMP No. 722 of 2022
12. Having regard to the provision of Section 21, it was held that by now it is fairly well-settled that the limitation for filing an application under Section 11 would arise upon the failure to make the appointment of the arbitrator within a period of 30 days' from issuance of the notice invoking arbitration. However, the Hon'ble Supreme Court held that a distinction between 'jurisdictional' and 'admissibility' issue is required to be considered in such cases. It was held that an issue of 'jurisdiction' pertains to the power and authority of the arbitrators to hear and decide a case. Jurisdictional issues include objections to the competence of the arbitrator or tribunal to hear a dispute, such as lack of consent, or a dispute falling outside the scope of the arbitration agreement. Issues with respect to the existence, scope and validity of the arbitration agreement are invariably regarded as jurisdictional issues, since these issues pertain to the jurisdiction of the tribunal.
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CMP No. 722 of 2022
13. On the other hand, admissibility issues were held to be relating to procedural requirements, such as a breach of pre-arbitration requirements, or a challenge to a claim or a part of the claim being either time-barred, or prohibited, until some pre-condition has been fulfilled. It was therefore held that question raised regarding the admissibility relates to the nature of the claim or the circumstances connected therewith. It was held that an admissibility issue is not a challenge to the jurisdiction of the arbitrator to decide the claim. As regard the objections raised by the respondents that the claim is ex facie time barred, the Hon'ble Supreme Court held that it is only in the very limited category of cases, where there is not even a vestige of doubt that the claim is ex facie time- barred, or that the dispute is non-arbitrable, that the court may decline to make the reference. However, it was held that if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwise it would encroach upon what is essentially a matter to be determined by the tribunal.
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CMP No. 722 of 2022
14. Applying these rule of law determined by the Hon'ble Supreme Court, this Court finds that in terms of the contract the parties were required to get the sale deed executed after the receipt of NOC from KSIIDC. It is contended by the respondents that they obtained NOC from the KSIIDC on 09.04.2018. But, there is nothing coming-forth from the respondents that the factum of them obtaining the NOC from KSIIDC was brought to the notice of the petitioner. Therefore, having regard to the terms of the contract, it cannot be said that the petitioner was obliged to get the sale deed executed immediately after the NOC was obtained by the respondents, since they were not made aware of the fact that the respondents had obtained the NOC at the hands of the KSIIDC.
13. Secondly, after the petitioner obtained an order at the hands of the District Judge in A.A.No.19/2011 on 07.09.2011, wherein, it was directed that the respondents are restrained from alienating, parting or encumbering the suit schedule property till adjudication of the arbitration
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CMP No. 722 of 2022dispute, by the conduct of the parties, it is clear that they jointly approached the KSIIDC seeking the NOC which would permit or enable the parties to get the sale deeds registered. A communication was made by the respondents along with the petitioner's son-Sri. Pramod Kumar P Laxmin, on 30.03.2012 and such a request made by the parties was not acceded to by the KSIIDC. Further, the respondents filed a suit in O.S.No.733/2020 seeking a decree of permanent injunction from restraining the petitioner from interfering with the peaceful possession of the suit schedule property and the plaint was returned at the instance of the petitioner herein by order dated 21.11.2020. The miscellaneous appeal filed by the respondents was also rejected by the order dated 26.08.2021. In the said order also it was made clear that in view of the arbitration clause contained in the agreement and also as per the order of the District Judge in A.A.No.19/2011 both the parties have to approach the arbitrator for resolving their dispute. Consequent thereto, the petitioner caused an arbitration notice on 28.07.2022
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CMP No. 722 of 2022and when the respondents did not respond positively, but gave a reply denying the claim of the petitioner, the petitioner has approached this Court. In fact, when the Civil Miscellaneous Petition was filed, it was filed at the hands of the petitioner as well as his son- Sri. Pramod Kumar P Laxmin. However, this Court by an interim order dated 02.09.2022 upheld the office objections and directed deletion of the second petitioner-Sri. Pramod Kumar P Laxmin from the array as party.
16. Having regard to the facts and circumstances obtained hereinabove, and going by the golden rule as found in the case of BHARAT SANCHAR NIGAM LIMITED (supra) that if there is even the slightest doubt, the rule is to refer the disputes to arbitration, otherwise it would encroach upon what is essentially a matter to be determined by the tribunal and that 'when in doubt, do refer', this Court is of the considered opinion that the Civil Miscellaneous Petition is required to be allowed by
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CMP No. 722 of 2022appointing a sole arbitrator. Accordingly, this Court proceeds to pass the following:
ORDER
(a) The petition is allowed appointing Hon'ble Sri. Justice R. Gururajan, Former Judge, High Court of Karnataka, as the sole arbitrator to enter reference of the disputes between the petitioner and the respondents and conduct proceeding at the Arbitration and Conciliation Centre (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 Sri. Justice R.Gururajan, Former Judge, High Court of
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Karnataka, as required under the Arbitration and Conciliation Centre Rules, 2012.
Sd/-
JUDGE DL