Karnataka High Court
Mr. Satyanarayana Murthy Milkkilineni vs M/S Terrasol Sustainability Solutions ... on 26 June, 2023
Author: R Devdas
Bench: R Devdas
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RP No. 456 of 2018
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 26TH DAY OF JUNE, 2023
BEFORE
THE HON'BLE MR JUSTICE R DEVDAS
REVIEW PETITION NO. 456 OF 2018
C/W
REVIEW PETITION NO. 32 OF 2020
IN R.P.NO.456 OF 2018
BETWEEN:
TERRASOL SUSTAINABILITY SOLUTIONS LLP
A LIMITED LIABILITY PARTNERSHIP FIRM
HAVING ITS REGISTERED OFFICE AT NO. 43,
ELECTRONICS CITY, PHASE II,
HOSUR ROAD, BENGALURU-560 100,
REPRESENTED BY ITS AUTHORISED
REPRESENTATIVE
MS. ANJU PRAKASH.
...PETITIONER
(BY SRI. KARAN JOSEPH, ADVOCATE)
Digitally signed
by JUANITA
THEJESWINI AND:
Location: HIGH
COURT OF
KARNATAKA 1. MR. SATYANARAYANA MURTHY MILKKILINENI
SON OF MR. KUTUMBAYYA,
AGED ABOUT 79 YEARS,
RESIDING AT HOUSE NO. 63 & 64,
RMV 2ND STAGE,
CENTRAL EXCISE HBC LAYOUT,
BOOPASANDRA,
BENGALURU-560 094.
SINCE DECEASED
REPRESENTED BY HIS LEGAL LR'S
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1(A) MRS. INDUKUMARI
W/O LATE MR. SATYANARAYANA
MURTHY MIKKILINENI
AGED ABOUT 80 YEARS
R/AT HOUSE No.63
5TH CROSS, CENTRAL EXCISE HBC LAYOUT
RMV 2ND STAGE
BENGALURU - 560 094
1(B) MR. KRISHNA PRASAD MIKKILINENI
S/O LATE MR. SATYANARAYANA
MURTHY MIKKILINENI
AGED ABOUT 60 YEARS
R/AT HOUSE No.63
5TH CROSS, CENTRAL EXCISE HBC LAYOUT
RMV 2ND STAGE
BENGALURU - 560 094
1(C) MRS. LAKSHMI BOBBA
D/O LATE MR. SATYANARAYANA
MURTHY MIKKILINENI
AGED ABOUT 54 YEARS
R/AT 7637, DON BUDGE AV
BATON ROUGE, LA 70810 USA
1(D) MS. SUPRIYA TUMMALA (KONERU)
W/O MR. KRISHNAKANTKONERU
AGED ABOUT 34 YEARS
R/AT No.9, RADHIKA NILAYA
1ST FLOOR, SAI MANDIR ROAD
VSR LAYOUT
KADUGODI, BENGALURU - 560 067.
1(E) MR. SUJAYENDRA TUMMALA
S/O MR. SUBRAMANYESHWARA RAO TUMMALA
AGED ABOUT 33 YEARS
R/AT No.9, VS REDDY LAYOUT
KADUGODI, BENGALURU - 560 067.
1(F) MR. DHARMIK SAI MIKKILINENI
S/O KRISHNA PRASAD MIKKILINENI
AGED ABOUT 23 YEARS
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RP No. 456 of 2018
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R/AT HOUSE No.63
RMV 2ND STAGE
CENTRAL EXCISE HBC LAYOUT
BOOPASANDRA
BENGALURU - 560 094
2. MR. B. V. NAIDU
SON OF MR. PRABHAKAR RAO,
AGED ABOUT 52 YEARS,
RESIDING AT NO. 1007,
JACARANDA,
BRIGADE MILLENNIUM,
J. P. NAGAR, 7TH PHASE,
BENGALURU-560 078.
3. MS. BANDARU APARNA
WIFE OF MR. B. V. NAIDU,
AGED ABOUT 43 YEARS,
RESIDING AT NO. 1007,
JACARANDA,
BRIGADE MILLENNIUM,
J. P. NAGAR 7TH PHASE,
BENGALURU-560 078.
4. SAGITAUR VENTURES INDIA PVT. LTD.,
HAVING ITS REGISTERED OFFICE AT NO. 43,
ELECTRONIC CITY, PHASE II,
HOSUR ROAD,
BENGALURU-560 100,
REPRESENTED BY ITS AUTHORISED SIGNATORY,
MR. B. V. NAIDU.
...RESPONDENTS
(BY SRI. C.K. NANDAKUMAR, SR. COUNSEL FOR
SRI. SHIVARAMA KRISHNAN, ADVOCATE FOR R1 (A TO F)
SMT. TANISHA SUNIL, ADVOCATE FOR
SRI. LOMESH KIRAN NIDUMURI, ADVOCATE FOR R2 & R3
V/O DATED 12.03.2019 NOTICE TO R4 IS DISPENSED
WITH)
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RP No. 456 of 2018
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THIS REVIEW PETITION IS FILED UNDER ORDER 47 RULE
1 R/W SECTION 114 OF CPC, PRAYING TO REVIEW THE ORDER
DATED 05/11/2018 IN WRIT PETITION NO. 3516/2016 C/W
CIVIL MISCELLANEOUS PETITION NO. 255/2014 (AT
ANNEXURE B), TO THE LIMITED EXTENT OF DELETING THE
REFERENCE TO THE PETITIONER'S COUNSEL HAVING
CONTENDED THAT THE TERM SHEET IS A NON-BINDING
DOCUMENT / NON-CONCLUDED CONTRACT AND THAT UNDER
THE SAME THE PARTIES AGREED TO ENTER INTO FURTHER
AGREEMENT, AND GRANT SUCH OTHER AND FURTHER RELIEFS
AS ARE JUST.
IN R.P.NO.32 OF 2020
BETWEEN:
MR. SATYANARAYANA MURTHY MILKKILINENI
S/O. SRI. KUTUMBAYYA,
SINCE DECEASED BY LR:
SRI. DHARMIK SAI MIKKILINENI
S/O KRISHNA PRASAD MIKKILINENI
AGED ABOUT 23 YEARS
R/AT NO. 63 , RMV 2ND STAGE,
CENTRAL EXCISE HBC LAYOUT,
BOOPASANDRA,
BENGALURU 560094
...PETITIONER
(BY SRI.C.K. NANDAKUMAR, SR. COUNSEL FOR
SRI. SIVARAMAKRISHNANAN M.S., ADVOCATE)
AND:
1. M/S TERRASOL SUSTAINABILITY SOLUTIONS LLP
A LIMITED LIABILITY PARTNERSHIP FIRM
HAVING ITS REGISTERED OFFICE AT NO. 43,
ELECTRONICS CITY, PHASE II, HOSUR ROAD,
BENGALURU 560100.
REP BY ITS AUTHORIZED REPRESENTATIVE
MR. ANJU PRAKASH
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2. MR. B V NAIDU
S/O PRABHAKAR RAO,
AGED ABOUT 55 YEARS
R/AT NO. 1007, JACARANDA,
BRIGADE ILLENNIUM,
JP NAGAR, 7TH PHASE,
BENGALURU 560078
3. MS. BANDARU APARNA
W/O. B V NAIDU,
R.AT NO. 1007, JACARANDA,
BRIGADE MILLENNIUM,
JP NAGAR, 7TH PHASE,
BENGALURU 560078
4. M/S. SAGITAUR VENTURES INDIA PVT LTD
HAVING ITS REGISTERED OFFICE AT 43,
ELECTRONICS CITY, PHASE II, HOSUR ROAD,
BENGALURU 560100.
REP. BY ITS B V NAIDU
....RESPONDENTS
(BY SRI. AJAYKUMAR M, ADVOCATE)
THIS REVIEW PETITION IS FILED UNDER ORDER 47 RULE
1 R/W SECTION 114 OF CPC, PRAYING TO
1. REVIEW THE ORDER DATED 05/11/2018 PASSED BY THIS
HON'BLE COURT IN WP NO. 3516/2016 C/W CMP NO.
255/2014 (ANNEXURE-A)
2. PROVIDE CLARIFICATION OF PARAGRAPH 22 OF THE
IMPUGNED ORDER AT ANNEXURE-A BY DIRECTING THE
TRIBUNAL TO TRY AND ADJUDICATE THE ISSUE WITH
RESPECT TO STAMP DUTY PAYABLE ON THE TERM SHEET AS A
PRELIMINARY ISSUE.
3. PASS ANY SUCH FURTHER ORDERS AS THIS HON'BLE
COURT MAY DEEM FIT IN THE INTEREST OF JUSTICE AND
EQUITY.
THESE PETITIONS, COMING ON FOR ADMISSION, THIS
DAY, THE COURT MADE THE FOLLOWING:
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COMMMON ORDER
R.DEVDAS J., (ORAL):
These two review petitions arise out of an earlier
order passed by this Court in W.P No.3516/2016 c/w CMP
No.255/2014 dated 05.11.2018. By the said order two of
the learned retired judges of this Court were appointed as
Arbitrators and were requested to choose an umpire/
presiding Arbitrator and to proceed with the matter in
accordance with clause (23) of the term sheet/agreement
dated 27.08.2014 and adjudicate the dispute on merits
between the parties. Therefore, both these review
petitions are clubbed, heard together and disposed of by
this common order.
2. After the matter was referred for arbitration and
the arbitral tribunal proceeded accordingly, one of the
parties i.e., M/s. Terrasol Sustainability Solutions LLP filed
a review petition in R.P No.456/2018 with a prayer to
delete a portion of the order of reference, which according
to the said review petitioner was a statement said to have
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been made by the learned counsel appearing for the said
party, but it was a statement which was wrongly recorded.
Therefore, only to that extent the review petition was filed.
3. On the other hand, the other party
Mr.Satyanarayana Murthy Milkkilineni filed another review
petition in R.P No.32/2020 seeking clarification of
paragraph No.22 of the original order of reference and
with a prayer to direct the arbitral tribunal to try and
adjudicate the issue with respect to stamp duty payable on
the term sheet as a preliminary issue.
4. Learned Senior counsel Sri. C.K. Nandakumar,
appearing for the review petitioner in R.P No.32/2020
submits that one of the main issues raised by
Mr.Satyanarayana was that the term sheet was
insufficiently stamped. Infact during the course of the
proceedings in a petition filed under Section 9 of the
Arbitration and Conciliation Act, this issue was raised and
the trial Court took note of the objections raised and after
impounding the document, it was sent for adjudication and
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the petitioner was called upon to pay the stamp duty along
with penalty as adjudicated. The same was paid. However,
during the course of the proceedings of the Civil
Miscellaneous petition, the review petitioner in R.P
No.32/2020, once again raised an issue of insufficient
stamp duty, on the ground that the articles that are
applicable would be Article 5(g), 5(i)(d),12,5(j) 6(2), 12,
22, 29 and 41(4) of the Karnataka Stamp Act and not
Article 5(c) as was determined by the trial Court. While
considering this aspect to the matter, this Court, while
noticing the fact that there was an adjudication at the
hands of the trial Court, however, directed that if it is
found by the arbitral tribunal that the agreement is to be
brought under any other article of the Stamp Act, it can be
done so. Consequently, with the said terms of reference,
the reference for arbitration was made by this Court by
order dated 05.11.2018.
5. Learned Senior counsel however submits that in
view of the latest decision of the Hon'ble Supreme Court in
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the case of M/s. N.N.Global Mercantile Private
Limited Vs. M/s. Indo Unique Flame Ltd and others
decided on 25.04.2023, the majority view of the
Constitution Bench is that if a document is not stamped or
insufficiently stamped, the same cannot be acted upon, in
view of Section 35 of the Stamp Act. In that view of the
matter, learned Senior counsel would submit that in view
of the recent decision of the Hon'ble Supreme Court, this
Court should declare that the arbitral tribunal cannot
proceed with the arbitration.
6. Per contra, learned counsel appearing for the
respondents in R.P No.32/2020 and the review petitioner
in R.P No.456/2018 jointly submit that insofar as the
arbitrations which have commenced in terms of the
directions given by the High Courts or by the Supreme
Courts, the judgment in the case of M/s. N.N.Global
(supra) does not say anything. Even otherwise, having
regard to the facts and circumstances of this case, it is
submitted that since the adjudication has already been
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held at the hands of the trial Court and this Court while
noticing the said adjudication had permitted the contesting
party to raise such an issue before the arbitral tribunal and
the arbitral tribunal were requested to consider such an
objection regarding insufficiency of the stamp duty.
7. Attention of this Court is drawn to paragraph
No.107(V) of the judgment in the case of M/s.
N.N.Global (supra). Learned counsel had pointed out
from the said paragraph that the Hon'ble Supreme Court
had made it clear that if objection is raised that a
document is insufficiently stamped, and it appears to the
Court to be on the face of it, wholly without foundation,
the Court may make the Reference on the basis of the
existence of an Arbitration Agreement otherwise and then
leave it open to the Arbitrator to exercise the power under
Section 33, should it become necessary. In that view of
the matter it is submitted by the learned counsels that
going by the prayer made by the review petitioner in R.P
No.32/2020 wherein it was only requested that this Court
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should direct the arbitral tribunal to consider the issue of
insufficiency of stamp duty as a preliminary issue and
therefore, merely because a subsequent judgment is
rendered at the hands of the Supreme Court, the review
petitioner should not be permitted to make a prayer before
this Court to bring an end to the arbitral proceedings.
8. Learned counsels would draw the attention of
this Court to the explanation provided to Order 47 Rule 1
of CPC. Learned counsels submit that the explanation
clearly provides that it shall not be a ground for review, if
the judgment relied upon earlier has been subsequently
reversed or modified by a subsequent decision of a
superior Court.
9. Heard the learned Senior counsel Sri. C.K.
Nandakumar for the review petitioner in R.P No.32/2020
who also appeared for the respondents in the other review
petition, the learned counsels for the review petitioner in
R.P No.456/2018 and the respondents in R.P No.32/2020
and perused the review petition papers.
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10. Insofar as the contention of the learned Senior
counsel regarding the effect of the decision of the Hon'ble
Supreme Court in the case of M/s. N.N.Global (supra)
and his consequent prayer to bring an end to arbitrary
proceedings are concerned, this Court is of the considered
opinion that such a prayer cannot be acceded to. As
rightly pointed out by the learned counsels on the other
side, Order 47 Rule 1 of CPC, makes it clear that merely
because a subsequent judgment is rendered by a superior
Court reversing or modifying the earlier position of law, it
shall not be a ground for review. Moreover, the Hon'ble
Supreme Court itself has clarified the position that if the
Court considering the petition under Section 11, comes to
a conclusion that an objection regarding insufficiency of
the stamp duty is wholly without foundation, it should not
prevent the Court from directing the arbitral tribunal to
consider such an issue. In the present context, where
such an objection was allowed at the hands of the trial
Court, adjudication of the stamp duty was made at the
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hands of the competent authority and admissible stamp
duty along with penalty was collected and thereafter,
another objection was raised for looking into a few other
provisions of the Stamp Act, this Court had directed that
the tribunal shall consider such an objection and proceed
in accordance with law. Therefore, at any rate, having
regard to the factual position obtained in the present case,
this Court is of the considered opinion that the arbitral
tribunal should proceed further to consider such an
objection raised at the hands of the review petitioner in
R.P No.32/2020 for consideration of the objections
regarding insufficiency of the stamp duty as a preliminary
issue. In that view of the matter, the review petition in
R.P 32/2020 should be allowed.
11. Insofar as the other review petition is
concerned, learned counsel for the review petitioner in R.P
No.456/2018, has drawn the attention of this Court to
paragraph No.20 of the order dated 05.11.2018 in W.P
No.3516/2016 c/w CMP No.255/2014. Learned counsel
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submit that it was only stated by the learned counsel
appearing for the petitioner therein i.e., M/s. Terrasol
Sustainability Solutions LLP that the other side has
unequivocally admitted that the term sheet was a
non-binding document between the parties and was
subject to further agreement to be executed for bringing
into effect the proposal made down under the term sheet.
However, while recording the arguments of the learned
counsel appearing for M/s. Terrasol Sustainability
Solutions LLP in paragraph No.8 of the same order it was
stated that the learned counsel would contend that the
term sheet is a non-binding document between the parties
and was subject to further agreements. In this regard, the
review petition has been filed only to clarify that the
statement recorded in paragraph 8 of the order was
wrongly recorded and it should not be held against the
party.
12. At this juncture, learned counsel for the review
petitioner in R.P No.456/2018 and learned counsel for the
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respondent in other review petition submit that arbitral
tribunal had gone ahead with the proceedings and had
reserved the matter for passing the award. However, in
view of one of the parties bringing to the notice of the
arbitral tribunal, the decision of the Hon'ble Supreme
Court in the case of M/s. N.N.Global (supra), the arbitral
tribunal has recalled the order reserving the matter for
award and has passed another order on 19.06.2023
directing re-listing of the matter on 26.06.2023. The
learned counsel do not dispute the fact that the matter
was adjourned on 26.6.2023.
13. It is also brought to the notice of this Court that
the arbitral tribunal had considering the plea of the other
party regarding consideration of the issue of insufficiency
of stamp duty as a preliminary issue and had passed an
order on 07.08.2019 that the same will not be heard as a
preliminary issue and on the other hand, the question will
be considered along with the main matter.
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14. Having gone through the entire order dated
05.11.2018, this Court is convinced that prayer made in
the review petition No.456/2018 is also required to be
allowed.
15. Insofar as the opinion of the arbitral tribunal
that the question regarding insufficiency of the stamp duty
will not be heard as a preliminary issue and it will be
considered along with the main matter, having regard to
the established position of law which has been reiterated
once again in the recent decision of the Hon'ble Supreme
Court in the case of M/s. N.N.Global (supra), the arbitral
tribunal is to consider such an objection as a preliminary
issue and a finding has to be given on the said issue.
16. Consequently, this Court proceeds to pass the
following:
ORDER
1. The review petition in R.P No.456/2018 is allowed.
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2. It is clarified that the observations made in paragraph No.8 of the order dated 05.11.2018 shall not be held against M/s. Terrasol Sustainability Solutions LLP, having regard to the position clarified in paragraph No.20, as noticed herein above.
3. The review petition No.32/2020 is allowed.
4. The arbitral tribunal is requested to consider the issue of insufficiency of the stamp duty raised at the hands of the review petitioner as a preliminary issue and pass the orders.
5. Ordered accordingly.
Sd/-
JUDGE SKS