Karnataka High Court
Mr Prakash Chand P Ostwal vs Mr L Srinivas on 17 October, 2014
Equivalent citations: 2015 (2) AKR 115
Bench: N.K.Patil, Rathnakala
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 17TH DAY OF OCTOBER 2014
P RESENT
THE HON'BLE MR. JUSTICE N.K. PATIL
AND
THE HON'BLE MRS. JUSTICE RATHNAKALA
MISC. FIRST APPEAL NO.4957 OF 2012 (AA)
BETWEEN:
MR.PRAKASH CHAND P.OSTWAL
S/O LATE SRI C.PANNALAL,
AGED ABOUT 52 YEARS,
R/AT NO.104,
THIMMAIAH ROAD,
BANGALORE - 560 011. ...APPELLANT
(BY SRI P.MAHESHA & SRI KRISHNA B.J., ADVS.)
AND:
MR. L.SRINIVAS,
S/O MR.LOHIDAS,
AGED ABOUT 30 YEARS,
R/AT NO.14/1,
DINNUR MAIN ROAD,
R.T.NAGAR, BANGALORE - 560 032. ...RESPONDENT
(BY SRI PRAVEEN H.P., ADV.)
THIS MISC. FIRST APPEAL IS FILED UNDER SECTION 37
(1) (A) OF ARBITRATION AND CONCILIATION ACT OF 1996,
AGAINST THE ORDER DATED:11.01.2012 PASSED ON
A.A.NO.13/2011 ON THE FILE OF THE 6TH ADDITIONAL CITY
CIVIL AND SESSIONS JUDGE, BANGALORE CITY, ALLOWING
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THE PETITION FILED UNDER SECTION 9 OF THE ARBITRATION
AND CONCILIATION ACT.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 09/10/2014 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, RATHNAKALA J.,
DELIVERED THE FOLLOWING:-
JUDGMENT
This appeal is filed against the order dated 11.1.2012 passed in A.A.No.13/2011 passed by the VI Addl.City Civil & Sessions Judge, Bangalore City.
2. For the sake of convenience, the parties will be referred to as per their ranking in the trial court.
3. Facts unrevealed are:
The petitioner had filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (for short hereinafter referred to as 'the Act') seeking for a restraint order against the respondent from alienating the petition schedule property pending disposal of the arbitral proceedings.
4. In the petition it was alleged that, the respondent being the owner of the petition schedule property agreed to 3 sell the same in favour of the petitioner for a consideration of Rs.72,00,000/- and in lieu of the same, paid Rs.40,00,000/- as advance and the respondent executed an agreement of sale on 23.2.2008. As per the said agreement deed, sale deed was to be executed in favour of the petitioner within 90 days by procuring all the required documents, but even after lapse of two years, the respondent/owner failed to execute the sale deed. The petitioner again paid Rs.15,00,000/- to the respondent on his request on 28.12.2010 towards the balance sale consideration instead of executing the sale deed. He tried to alienate the suit property to deprive the right of the petitioner. A notice was issued to him by the petitioner on 24.1.2011 to appoint the Arbitrator as provided in the agreement for settlement of dispute. The petition schedule property is the only security in respect of the advance amount.
5. The respondent contested the petition by filing his objection statement. He did not dispute the execution of the agreement of sale and receipt of Rs.40,00,000/- as advance. His contention was, the petitioner himself did not come 4 forward to perform his part of obligation inspite of a letter being issued to him on 30.9.2008. The petitioner was unable to get the agricultural land registered in his name since his income other than the agricultural income was more than Rs.2 lakhs. The respondent has returned the advance amount received along with the additional amount of Rs.15 lakhs by issuing five cheques and the agreement dated 23.2.2008 is cancelled. Since the agreement itself is cancelled, arbitration clause stands ceased. Hence, he did not issue reply to the notice of the petitioner dated 5.1.2011 and also the letter dated 24.1.2011. The petition filed without initiating arbitration proceedings is not maintainable.
6. When the matter came up for consideration, the learned Trial Judge dealt with the same on the age old principles that govern the applications filed in the civil suits for temporary injunction i.e., existence of prima facie case and balance of convenience leaning in favour of the petitioner and hardship he may have to suffer in the event the injunction is refused to him. The learned Judge was not 5 impressed by the contention of the respondent that the agreement, since it is repudiated, thereby the arbitration clause no more binds the parties. On the basis of Clauses- 10 and 11 of the agreement, the court below has gathered that the intention of the parties was arbitration is to be the sole remedy. Further he finds that the Court has jurisdiction to make an interim order and restrain the respondent by the impugned order from alienating the petition schedule property.
7. The relevant Clauses-10 and 11 of the Agreement in question, which are extracted in the impugned order, read as under:
"10. Specific Performance In the event of breach of obligations under this Agreement by either party, the non-breaching party shall have the right to claim specific performance from the breaching party and in this regard shall be entitled to pursue all remedies available under law and equity.6
11. Arbitration This Agreement will be governed by all applicable laws of India. Any difference or dispute or claim arising out of or in relation to this Agreement to Sell, which is not resolved by the parties amicably, shall be resolved by Arbitration under and in accordance with the Indian Arbitration and Conciliation Act, 1996. The venue for Arbitration shall be Bangalore. The award given by the Arbitrators shall be final and binding on both the parties."
A reading of the above makes it clear that, arbitration is the forum chosen by the parties to agitate any difference on dispute arising out of the transaction interse.
8. It is the submission by the learned Counsel for the petitioner that, even till today the respondent before this Court (petitioner in the court below) has not taken any action to initiate the arbitration proceedings. Even otherwise, he is not qualified to get the agricultural land registered since his income exceeds more Rs.2 lakhs per annum. The impugned order is coming in his way of developing his property in accordance with his choice and it is he, who is put to greater 7 hardship than the respondent herein. The impugned order has constrained him from developing the property and enjoying its fruits.
9. The agreement dated 23.2.2008 is not at all disputed. The very fact that the respondent disputed the binding nature of the agreement and objected the very jurisdiction of the Court under Section 9 of the Act, is an indication that there is a lis between the parties that needs adjudication in accordance with law. The parties at the inception itself have voluntarily opted the arbitral forum for adjudication of any of the dispute arising from the transaction. Now within the narrow compass of Section 9 of the Act, the Civil Court has no jurisdiction to adjudicate the issues that have arisen between the parties, the only resort is by way of arbitration. Rightly the learned Trial Judge has passed the impugned interim order by exercising the jurisdiction vested in him under Section 9 of the Act, as an interim measure of protection of the property in question before initiation of the arbitral proceedings. As such, the intent of the legislature is clear by the wordings used in 8 Section 9 of the Act. The relevant provision of Section 9 of the Act reads as under:
"9. Interim measures, etc. by Court. - A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a court-
(i)........
(ii) for an interim measure of protection in respect of any of the following matters, namely:-
(a) the preservation, interim custody or sale of any goods which are the subject-
matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
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(e) such other interim measure of protection as may appear to the court to be just and convenient, and the court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it".
From the wording "before" used above, it is clear that even before initiation of the arbitration proceedings, the Civil Court has jurisdiction to pass interim order. In the given circumstances, we do not find any erroneous exercise of jurisdiction by the court below. No substantial question either on facts or on law would arise for our consideration in this first appeal.
Accordingly, this appeal is rejected.
Sd/-
JUDGE Sd/-
JUDGE KNM/-