Karnataka High Court
Basanth Poddar vs Trishul Developers on 27 June, 2018
Author: B.Veerappa
Bench: B. Veerappa
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF JUNE 2018
BEFORE
THE HON'BLE MR. JUSTICE B. VEERAPPA
CIVIL MISCELLANEOUS PETITION No.198/2017
BETWEEN
Basanth Poddar
S/o late Mr. K.P.Poddar
Aged about 57 years
No.487, 10th Cross
RMV Extension
Bangalore-560080. ..Petitioner
(By Sri Aditya Narayan, Advocate)
AND
1. Trishul Developers
No.111-B, Mittal Towers
No.6, M.G. Road
Bangalore-560080.
2. O.P.Mittal
S/o late Mr. Maliramji Mittal
Aged about 67 years
94 D 9th Cross Road
RMV Extension
Bangalore-560080.
3. Niraj Mittal
S/o Mr. O.P. Mittal
Aged about 43 years
94 D 9th Cross Road
RMV Extension
Bangalore-560080. .. Respondents
(By Ms. Karishma Naghnoor for Sri Arvind Kamath, Advocates)
2
This CMP is filed under Section 11(5) of
Arbitration and Conciliation Act, 1996 praying to
appoint an arbitrator to adjudicate the dispute arising
out of non-payment of outstanding amount by the
respondents, under the loan agreement dated
24.03.2015 executed amongst the petitioner and the
respondents.
This CMP coming on for admission this day, the
Court passed the following: -
ORDER
The petitioner has filed this civil miscellaneous petition under the provision of Section 11(5) of Arbitration and Conciliation Act, 1996 (for short `Act') to appoint a Sole Arbitrator to adjudicate the dispute arising out of non-payment of outstanding amount by the respondents under the "Loan Agreement" dated 24.03.2015 entered into between the petitioner and respondents.
2. It is the case of the petitioner that on 24.03.2015 the petitioner extended a loan of Indian Rupees Three Crores (INR 3,00,00,000) to the respondents vide loan agreement dated 24.03.2015. Under the said loan agreement, respondent Nos. 2 and 3 tendered personal guarantees for repayment of loan. 3 Respondent No.1 issued cheques at the time of execution of the loan agreement, for payment of the loan amount with interest and thereon. On 01.10.2015, respondent No.1 paid a sum of Indian Rupees One Crore (INR 1,00,00,000/-) and interest accrued amounting to Indian Rupees Sixteen Lakhs and Twenty Thousand (INR 16,20,000/-) to the petitioner. The total debt which was remained due and owing from the respondents to the petitioner under the Loan Agreement, including interest was Indian Rupees Two Crore Twenty Two Lakhs and Fifty Thousand (Rs.2,22,50,000/-). Therefore, the petitioner was forced to issue a demand notice on 18.04.2017 calling upon the respondents to repay the outstanding amount and handover the certificate evidencing deduction of tax at source, or alternatively, pay the same sum to the petitioner.
3. In response to the said demand notice, respondents replied to the notice on 02.05.2017 admitting the receipt of the loan and claimed that for the first time loan amount has been appropriated as 4 consideration for purchase of certain apartments by Mineral Enterprises Limited in an apartment complex known as "Mittal Palms" being constructed by the respondent No.1. Thereafter, the petitioner issued an arbitration notice on 06.06.2017 to the respondents invoking the Arbitration Clause as stipulated at Clause 7.2 in the aforesaid loan agreement to refer the matter to the sole Arbitrator. The same was received by the respondents on 07.07.2017. In response to the said notice, on 29.06.2017 respondents replied stating that they required further time to respond to the arbitration notice and period of thirty days to appoint an Arbitrator prescribed under the Arbitration and Conciliation Act, 1996 was expired on 07.07.2017. Therefore, the petitioner is before this Court for the relief sought for.
4. I have heard the learned counsel for the parties to the lis.
5. Sri. Aditya Narayan, learned counsel for the petitioner reiterating the averments made in the petition contended that Loan Agreement entered into between 5 the parties is not in dispute and there is a Clause with regard to the dispute to resolve or refer the matter to the Arbitrator as per Clause 7.5 of the Loan Agreement. He further contended that the petitioner has issued an arbitration notice on 06.06.2017 as contemplated under Section 11(5) of the Arbitration and Conciliation Act, 1996. Hence, he sought to allow the petition.
6. Per contra, Ms Karishma Naghnoor, learned counsel for the respondents fairly submits that there exists a Loan Agreement entered into between the parties on 24.03.2015 and arbitration clause at 7.2 refers the dispute to a Sole Arbitrator. She further submits that there are certain issues to be decided by the Arbitrator which were disputed by the respondents.
7. In view of the rival contentions urged by the learned counsel for the parties, it is undisputed fact that there was Loan Agreement entered into between the parties on 24.03.2015. In the said agreement, Clause 7.2 pertains to arbitration which reads as under:
7.2. Dispute Resolution. Any dispute arising among Parties under this 6 Agreement shall be referred to arbitration before a Sole Arbitrator to be designated by consensus amongst the Parties. The provisions of the Arbitration & Conciliation Act, 1996, shall apply to an arbitration commenced under this Agreement. The proceedings of the arbitration shall be in the English language. The seat of arbitration shall be Bangalore, India.
8. It is also not in dispute that the petitioner issued arbitration notice on 06.06.2017 as contemplated under Section 11(5) of the Arbitration & Conciliation Act, 1996. Therefore, the petitioner has made out a case to allow the petition as prayed for.
9. In view of the aforesaid reasons, civil miscellaneous petition is allowed. Hon'ble Justice Dr. N Kumar, former Judge of this Court is appointed as Sole Arbitrator to adjudicate the dispute arising out of the non-payment of outstanding amount by the respondents under the Loan Agreement dated 24.03.2015 entered into between the parties to the lis.
Registry is directed to send copy of this order to the Hon'ble Justice Dr. N Kumar, former Judge and Arbitration Center for reference.
7Ordered accordingly.
Sd/-
JUDGE Bkm/nms