Karnataka High Court
Sri. Malchira C. Nanaiah vs M/S Pathak Developers Pvt Ltd., on 5 October, 2020
Author: S R.Krishna Kumar
Bench: S.R.Krishna Kumar
1
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 5TH DAY OF OCTOBER, 2020
BEFORE
THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR
CIVIL MISCELLANEOUS PETITION NO.113/2019
BETWEEN:
1. SRI. MALCHIRA C. NANAIAH
S/O LATE SRI.MALACHIRA CHITIAPPA
AGED 65N YEARS
2. SMT. M.N. NEELAMMA
W/O SRI. MALCHIRA C. NANAIAH
AGED 61 YEARS
BOTH ARE R/AT NITOOR VILLAGE
AND POST VIA BALELE
SOUTH KODAGU - 571 219
...PETITIONERS
(BY SRI.RUPA RON, ADVOCATE
AND SRI.POONACHA C.M., ADVOCATE)
AND:
1. M/S PATHAK DEVELOPERS PVT. LTD.,
A COMPANY REGISTERED UNDER THE
COMPANIES ACT, 1956,
HAVING ITS REGISTERED OFFICE
AT NO.2997/2, RUKMA COMPLEX
KALIDASA ROAD
MYSURU - 570 002
REPRESENTED BY ITS DIRECTOR
SRI.SRIHARI PATHAK
2. SRI.JAYARAM PATHAK
CHAIRMAN AND MANAGING DIRECTOR
M/S PATHAK DEVELOPERS PVT. LTD,
BUILDERS AND PROMOTERS,
NO.2997/2, RUKMA COMPLEX
KALIDASA ROAD
MYSURU - 570 002
2
3. SRI. SRIHARI PATHAK
DIRECTOR
M/S PATHAK DEVELOPERS PVT. LTD,
BUILDERS AND PROMOTERS,
NO.2997/2, RUKMA COMPLEX
KALIDASA ROAD
MYSURU - 570 002
4. SRI. RAJU LOKANATH
S/O SRI.RAMAKRISHNAYYA
AGED ABOUT 67 YEARS
5. DR.VANAJA S. KUMAR
D/O SRI.RAMAKRISHNAYYA
AGED ABOUT 58 YEARS
6. DR.R.BALAKRISHNA
S/O SRI. RAMAKRISHNAYYA
AGED ABOUT 55 YEARS
7. SRI.R.JANARDHAN
S/O SRI.RAMAKRISHNAYYA
AGED ABOUT 58 YEARS
RESPONDENTS 4, 5, 6 AND 7
ARE RESIDING AT NO.2710
8TH CROSS, 2ND MAIN
V.V.MOHALLA
MYSURU - 570 002
...RESPONDENTS
(BY SRI.VENKATESH R. BHAGAT, ADV., FOR R1 TO R3;
NOTICE TO R4 TO R7 HELD SUFFICIENT V/O
DATED 14.09.2020)
THIS C.M.P. IS FILED UNDER SECTION 11(6) OF THE
ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO A)
APPOINT A RETIRED JUDGE TO ACT AS A SOLE ARBITRATOR IN
TERMS OF THE ARBITRATION CLAUSE COONTAINED IN
CLAUSE 6 OF THE AGREEMENT DATED 13.06.2014 AT
ANNEXURE-A; AND IN TERMS OF SECTION 11(6) OF THE
ARBITRATION AND CONCILIATION ACT, 1996 TO ENTER
REFERENCE AND ADJUCIATE THE DISPUTES AND
DIFFERENCES BETWEEN THE PARTIES, AT THE ARBITRATION &
CONCILIATION CENTRE, BENGALURU AND ETC.
THIS C.M.P. COMING ON FOR ADMISSION, THIS DAY, THE
COURT MADE THE FOLLOWING:-
3
ORDER
Heard learned counsel for the petitioners and learned counsel for respondent Nos.1 to 3 and perused the material on record. Respondent Nos. 4 to 7 having been served with notice of this petition, they have chosen to remain unrepresented and have not contested this petition.
2. The present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short), has been filed by the petitioners- Sri. Malchira C. Nanaiah and another, seeking an appointment of an Arbitrator in pursuance of Clause-6 of the Sale Agreement at Annexure-A dated 13.06.2014 against the respondents-M/s. Pathak Developers Private Ltd., and others
3. Clause-6 of the said Agreement, which is an Arbitration clause reads as under:-
"6. That the parties to this sale agreement hereby agree that any dispute between them shall be settled through an Arbitrator as provided under the Arbitration and Conciliation Act, 1996"4
4. It is submitted that the first notice was given by the petitioners to the respondents vide Annexure-D dated 08.10.2016 followed by a corrigendum at Annexure-E dated 02.11.2016. Despite the said notices having been served on the respondents, no response has been received to the same and the parties have failed to mutually agree for appointment of a sole Arbitrator in the present case. 5. Learned counsel for respondent Nos.1 to 3 submits that the respondents have various contentions and defences to urge on their behalf. In addition to the same, learned counsel submits that the sale agreement at Annexure-A dated 13.06.2014 which contains the Arbitration Clause No.6 is insufficiently stamped and as such, the same cannot be acted upon for any purpose whatsoever including seeking appointment of an Arbitrator. In support of the said contention, he places reliance upon the decisions of the Honb'le Apex Court in the cases of SMS Tea Estates (P) Ltd., Vs. Chand Mari Tea Co. (P) Ltd., - 2011 (14) SCC 66, which was followed in the case of 5 Garvare Wall Ropes Ltd., Vs. Coastal Marine Constructions - 2019 (9) SCC 209.
6. In reply to the contentions urged by the respondents, learned counsel for the petitioners submits that the various contentions and defences of the respondents on the merits of the matter including jurisdiction will have to be necessarily dealt with and decided by the Arbitral Tribunal as provided under Section 16 of the Arbitration and Conciliation Act, 1996. Insofar as the contention with regard to the Sale Agreement being insufficiently stamped is concerned, learned counsel for the petitioners submits that the petitioners undertake to pay the deficit stamp duty and penalty on the said Sale Agreement at Annexure-A dated 13.06.2014 on or before the first date of hearing before the Arbitral Tribunal. It is further submitted that the petitioners have no objection for this Court to direct that only upon the petitioners paying the deficit duty and penalty as stated supra, the Tribunal shall proceed with the matter and adjudicate upon the rival claims on merits. In this context, it is submitted by learned 6 counsel that since petitioners are senior citizens and in the light of the undertaking given by the petitioners to pay the deficit stamp duty and penalty as stated supra, it would be just and proper to proceed with appointment of the sole Arbitrator.
7. Per contra, learned counsel for respondent Nos.1 to 3, without prejudice to any of their contentions including the contention with regard to insufficiency of stamp duty on the sale agreement containing the arbitration clause submits that he has no objection for this procedure to be adopted subject to the condition that before the petitioners are permitted to file their claim petition before the Arbitral Tribunal, petitioners would have to ensure payment of duty and penalty and it is only thereafter that the petitioners could be permitted to file their claim petition and prosecute the same before the Arbitral Tribunal.
8. I have given my anxious consideration to the rival submissions and perused the material on record. 7
9. The legal position with regard to acting upon an arbitration agreement/clause contained in an insufficiently stamped document only after payment of deficit stamp duty and penalty is no longer res-integra in the light of the decisions of the Hon'ble Apex Court in SMS Tea Estates case and Garware Wall Ropes supra. However, in the peculiar facts and circumstances of the instant case, particularly, having regard to the joint submission and consent given by both sides to proceed with the appointment of the sole Arbitrator by imposing necessary conditions with regard to payment of stamp duty and penalty on the sale agreement by the petitioners on or before the first date of hearing before the sole Arbitrator, I deem it fit and proper to appoint a sole Arbitrator to enter upon reference and adjudicate upon the dispute between the parties.
10. Both the learned counsel have fairly agreed to the appointment of Mr.Vishwanath V. Angadi, retired District Judge to act as the sole Arbitrator to resolve the dispute between the parties under the provisions of the Act, 8 as per the Rules governing the Arbitration Centre at Bangalore.
11. Accordingly, this petition under Section 11 of the Act, is disposed of by appointing Mr.Vishwanath V. Angadi, retired District Judge, to enter into the said reference of Arbitration and act as the sole Arbitrator in the present case in the Arbitration Centre, Bengaluru, as per the Rules governing in the said Arbitration Centre.
12. Petitioners are hereby directed to pay the deficit stamp duty and necessary penalty on the Sale Agreement at Annexure-A dated 13.06.2014 on or before the first date of hearing fixed by the Arbitration Centre.
13. A copy of this order be sent to the Arbitration Centre, No.49, 3rd Floor, East Wing, Khanija Bhavan, Race Course Road, Bengaluru for proceeding further in the matter, on administrative side and also to Mr.Vishwanath V. Angadi, retired District Judge, to the address available with the said Arbitration Centre, Bengaluru. 9
14. It is made clear that the aforesaid procedure adopted by me is restricted and limited to the peculiar facts and circumstances obtaining in the instant case and with the consent of both sides and without prejudice to their rights and contentions. It is also made clear that this order is passed strictly in the light of the peculiar facts and circumstances of the instant case including the fact that the parties are senior citizens and this order shall not be treated as a precedent under any circumstances whatsoever.
Petition is disposed of accordingly.
All claims and contentions of any of the parties including jurisdiction, limitation, etc., are left/kept open to be decided by the Arbitral Tribunal.
Registry is directed to return all original documents produced by any of the parties after obtaining Photostat copies of the same.
Sd/-
JUDGE Mds/-