Karnataka High Court
Dr.A.Parthasarathy vs E Springs Avenues Pvt Ltd on 8 November, 2021
Author: Alok Aradhe
Bench: Alok Aradhe
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF NOVEMBER 2021
PRESENT
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR.JUSTICE ANANT RAMANATH HEGDE
COMAP NO.44 OF 2021
C/W
COMAP NO.58 OF 2021
IN COMAP NO.44 OF 2021
BETWEEN:
E-SPRING AVENUES PRIVATE LIMITED
HAVING ITS REGISTERED OFFICE
AT 8-2-269/S/61
SAGAR SOCIETY, ROAD NO.2
BANJARA HILLS, HYDERABAD-500034
REPRESENTED BY ITS DIRECTOR
K.V. RAYAPPA RAJU.
... APPELLANT
(BY MR. PRADEEP NAYAK, ADV.,)
AND:
1. DR. A. PARTHASARATHY
NO.001C, NO.48
SARATHY APARTMENTS, 8TH MAIN
13TH CROSS, MALLESHWARAM
BENGALURU-560003.
2. SMT. B.S. VIJAYAPRABHA
NO.001C, NO.48, SARATHY APARTMENTS
2
8TH MAIN, 13TH CROSS, MALLESHWRAM
BENGALURU 560003.
3. A.P. UJWAL DEEP
NO.001C, NO.48, SARATHY APARTMENTS
8TH MAIN, 13TH CROSS, MALLESHWRAM
BENGALURU 560003.
4. MRS. A.P. KEERTHI
NO.001C, NO.48, SARATHY APARTMENTS
8TH MAIN, 13TH CROSS, MALLESHWRAM
BENGALURU 560003.
5. A.P. PRAJWAL DEEP
NO.001C, NO.48, SARATHY APARTMENTS
8TH MAIN, 13TH CROSS, MALLESHWRAM
BENGALURU 560003.
6. LAKSHMIKANTH J. GOWDA
C/O E-SPRING BUILDING SYSTEMS (1) PVT LTD
NO.11/4, SUVARNA BHAVAN
QUEENS ROAD, BANGALORE-560052.
7. THE HON'BLE JUSTICE DEEPAK VERMA
D-19, THIRD FLOOR, GEETANJALI ENCLAVE
MALVIYA NAGAR, NEW DELHI-110017.
... RESPONDENTS
(BY MR. GEORGE JOSEPH, ADV., FOR R1 TO R3, R4, R5
VK NOT FILED IN R/O R4, R5
V/O DTD:1.3.2021 NOTICE TO R7 D/W)
---
THIS COMAP IS FILED UNDER SECTION 13(A) OF
COMMERCIAL COURTS ACT, 2015 R/W SECTION -37 OF THE
ARBITRATION AND CONCILIATION ACT, 1996 PRAYING TO SET
ASIDE THE COMMON JUDGMENT DATED 11.02.2019 PASSED BY
THE LXXXII ADDL. CITY CIVIL AND SESSIONS JUDGE, BENGALURU
(COMMERCIAL COURT) IN THE MATTERS OF
COM.A.S.NO.133/2019 AND COM.A.S.NO.169/2019, TO EXTENT
THAT IT SETS ASIDE THE FOLLOWING FINDINGS IN THE
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ARBITRAL AWARD DATED 19.08.2019 PASSED BY THE LEARNED
SOLE ARBITRATOR IN AC NO.135/2017. THIS TRIBUNAL IS
VESTED WITH THE REQUISITE JURISDICTION UNDER SECTION 16
OF THE ACT, 1996 TO ADJUDICATE THE DISPUTES BEFORE IT.
THE DEED OF CANCELLATION DATED 03.11.2008 OF THE JDA IS
AN ILLEGAL AND VOID DOCUMENT & ETC.
COMAP NO.58 OF 2021
BETWEEN:
1. DR. A. PARTHASARATHY
S/O LATE RAMACHAR
AGED ABOUT 90 YEARS
CURRENTLY R/AT 14067 APRICOT HL
SARATOGA, CALIFORNIA
95070 USA
REPRESENTED BY THE GPA HOLDER
A P UJVAL DEEP.
2. MRS. B.S. VIJAYAPRABHA
W/ O DR. PARTHASARATHY
AGED ABOUT 73 YEARS
CURRENTLY R/AT 335 5W
167TH AVE, BEAVERTON
OREGON, 97006 USA
REPRESENTED BY THE GPA HOLDER
A P UJVAL DEEP.
3. MR. A P UJVAL DEEP
S/O DR. PARTHASARATHY
AGED ABOUT 46 YEARS.
THE APPELLANTS ARE
PERMANENTLY R/AT NO.001C, NO.48
SARATHY APARTMENTS, 8TH MAIN
13TH CROSS, MALLESHWARAM
BENGALURU-560003.
... APPELLANTS
(BY MR. SREEKARA, ADV., FOR
M/S. DUA ASSOCIATES)
4
AND:
1. E-SPRINGS AVENUES PVT. LTD.
HAVING ITS REGISTERED OFFICE AT
8-2-269/S/61, SAGAR SOCIETY
ROAD NO.2, BANAJARA HILLS
HYDERABAD-500034
REPRESENTED BY ITS DIRECTOR
K V RAYAPPA RAJU.
2. MR. LAKSHMIKANTH J. GOWDA
S/O JUNJAPPA GOWDA
AGED ABOUT 54 YEARS
C/O E-SPRING BUILDING SYSTEMS (I) PVT LTD
NO.11/4, SUVARNA BHVAN
QUEENS ROAD, BANGALORE-560052.
3. HON'BLE JUSTICE DEEPAK VERMA (RETD)
SOLE ARBITRATOR
R/A D-19, 3RD FLOOR
GEETANJALI ENCLAVE
NEAR MALVIYA NAGAR
NEW DELHI-110017.
4. MRS. P. KEERTI
W/O SRI. RAVI
AGED ABOUT 51 YEARS
R/AT 335 SW, 167TH AVE
BEAVERTON, OREGON
970006 USA.
5. MR. A P PRAJVAL DEEP
S/O DR. PARTHASARTHY
AGED ABOUT 47 YEARS
R/AT 335 SW 167TH AVE
BEAVERTON, OREGON
97006 USA.
... RESPONDENTS
(BY MRS. ANUPAMA G. HEBBAR AND
MR. ARJUN AJAY, ADVS., FOR R4 & R5)
---
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THIS COMAP IS FILED UNDER SECTION 37(1)(C) OF THE
ARBITRATION AND CONCILIATION ACT, 1996 R/W SECTION
13(1A) OF THE COMMERCIAL COURTS ACT, PRAYING TO SET
ASIDE THE JUDGMENT DATED 11.02.2021 PARTLY, AS PASSED IN
COM.A.S.NO.133/2019 AND COM.A.S.NO.169/2019, TO THE
EFFECT OF ALLOWING COMMERCIAL A.S. NO.133/2019, PASSED
BY THE COURT OF LXXXII ADDL. CITY CIVL AND SESSIONS JUDGE
(CCH 83) AND PASS THE FOLLOWING ORDER. THAT THE
RESPONDENT NO.1 HAD PRAYED FOR SPECIFIC PERFORMANCE OF
THE REGISTERED JDA DATED 18.04.2007 AND THE OBSERVATION
BY THE ARBITRAL TRIBUNAL THAT THE RESPONDENT NO.1 HAD
FAILED TO PROVE ITS READINESS AND WILLINGNESS TO
PERFORM ITS OBLIGATIONS UNDER THE JDA AND ACCORDINGLY
THEIR PRAYER FOR SPECIFIC PERFORMANCE MUST BE
DISMISSED, HAS ATTAINED ITS FINALITY AND ACCORDINGLY
WARRANTS NO INTERFERENCE IN ABSENCE OF A CHALLENGE.
RESPONDENT NO.1 HAD BEEN PROVIDED A FULL OPPORTUNITY
TO LEAD THEIR CASE & ETC.
THESE COMAPS COMING ON FOR FINAL HEARING, THIS
DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:
ORDER
These appeals under Section 13(1-A) of the Commercial Court Act, 2015 read with Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short) have been filed against judgment dated 11.02.2021 passed by the Commercial Court, by which petitions filed by the parties under Section 34 of the Act are allowed and the award dated 19.08.2019 6 passed by the Arbitrator has been set aside and the claimant has been granted the liberty to commence the Arbitration proceeding again, if so advised. In order to appreciate the grievance of the parties, few facts need mention, which are stated infra.
2. The appellant viz., E-Spring Avenues Private Limited (hereinafter referred to as 'the claimant' for short) is a company incorporated under the Companies Act. The respondent Nos.1 to 5 (hereinafter referred to as 'the respondents' for short) are the owners of site bearing No.1, PID No.150-211-1, No.4, Shakthi Farm, Ward No.100 situated at Bhoopasandra Main Road, Kasaba Hobli, Bangalore North Taluk measuring 1,21,968 square feet (hereinafter referred to as 'the Schedule Property' for short).
3. The respondents entered into an unregistered Joint Development Agreement (JDA) dated 01.09.2005 in respect of the schedule property for the purpose of development of the said property with the claimant, respondent No.6 and one Vinirrmaa Projects Pvt. Ltd. The claimant was incorporated on 24.11.2005 for developing the 7 schedule property and to facilitate and ease out the procedural obstructions in availing of loans and working capital. The appellant thereafter entered into a registered Joint Development Agreement (JDA) dated 18.04.2007 with respondent Nos.1 to 5.
4. The appellant was informed by respondent No.1 that Joint Development Agreement (JDA) was sought to be cancelled via a purported deed of cancellation dated 03.11.2008, which was executed on the basis of a meeting of the Board held on 23.06.2008. The appellant thereupon issued a notice to the respondents on 08.10.2010. Since, the disputes have arisen between the parties, the appellant invoked the arbitration clause and issued a notice on 08.10.2010. The claimant thereafter filed a petition under Section 11 of the Act seeking appointment of an Arbitrator. A bench of this court by an order dated 12.10.2011 appointed Mr.A.Mohan Ram, Retired District and Sessions Judge as sole Arbitrator to decide the dispute between the parties.
5. Subsequently, the Arbitration proceedings commenced. However, at the stage of examination of 8 claimant's witness, Mr.A.Mohan Ram the sole Arbitrator retired from the proceedings and thereafter, the claimant sought appointment of an Arbitrator. A bench of this court by an order dated 01.08.2018 appointed Justice Deepak Varma as a new Arbitrator.
6. Thereupon the arbitrator resumed the proceedings and passed an award on 19.08.2019. The Arbitrator inter alia held that purported cancellation deed is invalid and Joint Development Agreement (JDA) has been mutually terminated. The refund of security deposit to the claimant under the Joint Development Agreement (JDA) was also directed and the claimant to bear the cost of the arbitral proceedings.
7. The appellant as well as the respondents filed petitions under Section 34 of the Act. The Commercial Court by an order dated 11.02.2021 allowed the petitions filed by the parties and set aside the arbitral award dated 19.08.2018 with liberty to the claimant to commence the Arbitration afresh. In the aforesaid factual background, the claimant has 9 filed COMAP No.44/2021, whereas, the respondents have filed an appeal viz., COMAP No.58/2021.
8. Learned counsel for the appellant in COMAP No.44/2021 (hereinafter referred to as 'the claimant' for short) submitted that the commercial court rightly held that the arbitral tribunal had the jurisdiction to adjudicate the disputes and the deed of cancellation dated 03.11.2008 is illegal and void document. It is further submitted that the finding recorded by the commercial court that Joint Development Agreement (JDA) has been mutually terminated is perverse as none of the parties before it had contended so. It is also urged that similarly the findings with regard to time being essence of Joint Development Agreement (JDA) is also perverse as it was not the case of the parties before the commercial court. It is also submitted that finding recorded by the commercial court with regard to readiness and willingness is perverse and without assigning any reason, the claimant has been held entitled to bear the cost of Arbitration proceeding. It is also urged that claimant is not pressing its submission that it was not afforded an adequate opportunity 10 to prove its case. IN this connection, learned counsel for the appellant has invited the attention of this court to the memo filed by the claimant which has been duly signed by the counsel stating that the claimant has been given adequate opportunity to present its case before the arbitrator.
9. On the other hand, learned counsel for the respondents submitted that the respondents have not been given adequate opportunity to present its case inasmuch as right to adduce evidence was closed by the arbitrator without giving any opportunity. It is further submitted that the relief of mandatory injunction sought for by the claimant was in the nature of specific performance of the contract. Therefore, the commercial court has rightly held that the claimant has failed to prove the element of readiness and willingness on its part.
10. We have considered the submissions made by learned counsel for the parties and have perused the record. Though many a submission have been made before us, however, it is not necessary to deal with the aforesaid submissions in the facts of the case. From perusal of the 11 order sheet of the proceeding before the arbitrator, it is evident that the proceeding before the arbitrator was fixed on 15.10.2018. On the aforesaid date, the claimant had filed the examination in chief of one Mr.K.V.Srinivasan by way of an affidavit which was rejected by the learned Arbitrator on the ground of delay and laches. Thereafter, the proceeding were not fixed for recording the evidence of the respondents and the learned Arbitrator on the same date i.e., 15.10.2018 closed the right of the respondents to adduce evidence and fixed the case for final hearing on 03.11.2018. The commercial court has taken note of the proceeding before the Arbitrator and in para 41 has recorded a finding that the learned Arbitrator has not provided full opportunity to the parties to present the case. In view of the aforesaid finding, the commercial court ought not to have proceeded to record the findings on the issues. Therefore, the impugned judgment dated 11.02.2021 passed by the commercial court except the finding contained in para 41 of the judgment is hereby set aside.
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In the result, the matter is remitted to the learned Arbitrator. Ordinarily, we would have granted an opportunity to both the parties before the learned Arbitrator if so advised, however, the counsel for the claimant has filed a memo stating that claimant has been given adequate opportunity to present its case by the learned Arbitrator. Therefore, it is directed that the respondents shall be given an opportunity to adduce evidence and thereafter the learned Arbitrator shall proceed with the matter expeditiously.
In the result, the appeals are disposed of.
Sd/-
JUDGE Sd/-
JUDGE SS