Bangalore District Court
M/S Sukee Constructions And Developers ... vs S.P.Mittalal Since Dead By Lrs 1(A) ... on 21 October, 2024
KABC170021032023
IN THE COURT OF LXXXIV ADDL. CITY CIVIL AND
SESSIONS JUDGE (CCH-85) (COMMERCIAL COURT),
BENGALURU
DATED THIS THE 21st DAY OF OCTOBER 2024
PRESENT
SRI.RAMAKANT CHAVAN,
B.Com., LL.B.(Spl)
LXXXIV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.A.P.No.129/2023
PETITIONERS:
1. M/s Sukee Constructions and Developers Pvt. Ltd.
No.101/2, Gurukar Devanna
Road,
Fort Mohalla, Mysore-57004
Rep. by its Chairman,
Goutham Chand H.
2. Goutham Chand H.,
S/o Late C. Hagamial,
Aged about 57 years,
R/o Fort Mohalla,
Mysore
(By Sri.Abhilash Raja V., Adv.)
AND
RESPONDENTS:
1. Late S.P. Mittalal,
S/o Late Pannalal
2 Com.A.P.No.129/2023
1(a) Vinod Kumar,
S/o Late Chandrakala and
Rickab Chand Dhoka
Aged about 47 years,
No.47, Mambalan High Road,
T. Nagar, Chennai - 17
1(b) Neeta Kumarai Mutha,
D/o Late Chandrakala and
Rickab Chand Dhoka
Aged about 44 years,
No.123, Mambalan High Road
T. Nagar, Chennai - 17
1(c) Bhagyavathi
W/o J. Mahaveer Chand,
Aged about 62 years,
No.1001, 10th floor, 14th Block,
North Town (Binnymill),
Perambur, Chennai
2. S. M. Lalit Jain,
S/o Mittala,
Aged about 59 years,
R/at No.914, 2nd floor,
Nagarathpet,
Bengaluru - 560 002
3. S. M. Suresh Kumar,
S/o Mittala,
Aged about 50 years,
Shop No.6, MSMSS,
Marketing, Avenue Road,
Bengaluru - 560 002
4. S. M. Nirmal Kumar,
S/o Mittalal,
Aged about 60 years
R/at No.914, 2nd floor,
Nagarathpet,
Bengaluru - 560 002
3 Com.A.P.No.129/2023
5. S. M. Sajjan Raj,
S/o Mittala,
Aged about 54 years,
R/at No.31, 2nd Floor,
Shanty Kunji, Chougalli,
Siddanna Lane, Cubbonpet
Bangalore-560002
6. Siddaraju,
S/o Late Siddappan,
Aged about 51 years,
No.759/1, 6th Cross,
Ramanuja Road
Mysore-570004
7. H. S. Ramesh,
Major,
S/o Late H. B. Shivaramappa,
R/at No.251 A Block,
Vijayanagara 3rd Stage,
Mysore-570017
8. K. V. Chinnaiah,
S/o Venkatasubbaiah,
Aged about 57 years,
R/at No.247, A Block,
Vijayanagra 3rd Stage,
Mysore-570017
9. Veena,
W/o Renil T. R.,
Aged about 37 years,
R/at "Sheethal",
K.G.Halli Post,
H. D. Kote Taluk-571125
10. G. M. Rathna Varma,
S/o G. B. Sreenivasa,
Aged about 33 years,
R/at No.614/615, Ashok Road,
Mysore - 570 001
4 Com.A.P.No.129/2023
11. K.A.Ashok Yadav,
S/o K. C. Anand,
Aged about 51 years,
R/at No.365, JLB Road
Mysore-570005
(By Sri.Deepak, Adv. for R1, R1(a) to(c),
Sri.Chetan Kumar H., for R2 to 4,
Sri.Neeraj Rajiv Shivam, Adv. for R11)
R6 - absent.
R7 to 10 - Exparte
12. Justice Subash B Adi
Former Judge,
Sole Arbitrator,
Arbitration and Conciliation Center,
Bengaluru - 560 001
Date of Institution 05.09.2023
Nature of the Petition For recovery of money
Date on which judgment
pronounced 21.10.2024
Total Duration Years Months Days
01 01 16
LXXXIV Addl. City Civil & Sessions Judge
(CCH-85) Commercial Court, Bengaluru
5 Com.A.P.No.129/2023
JUDGMENT
This petition is filed U/Sec.34 (2)(b)(ii) and Sec.34(2A) of the Arbitration and Conciliation Act for the following reliefs:
(a) Partially set aside the award in so far as claims as against the respondent Nos.1(a) to (c) and 5 are concerned and remand the matter back to the Tribunal for adjudication on the Issues framed.
(b) Pass such order and further orders that this Hon'ble Court may deem appropriate in the facts and circumstances of the case.
2. The brief facts leading to the case are as follows:-
(a) That the petitioner is a private limited company. The respondent Nos.1 to 5 are the owners of the property bearing Sy.Nos.205, 291, 206/1, 206/2, 206/3, 207, 208/1, 204, 203, 198/2 and 189/4 as mentioned in the schedule. They entered into a JDA on 23.03.2007 with the petitioner and the said JDA is registered. As per the Agreement, the respondent No.1 to 5 who are the owners of the lands were to share the developed area with 55% of the interest vesting with them and remaining 45% of the interest with the petitioner. The respondent Nos.1 to 5 being the owners of the schedule properties have executed a GPA on 23.03.2007 in favour of the petitioner.
(b) It is further pleaded that in pursuant of the JDA and GPA, the petitioner made an application to MUDA for change of use of land of the properties. MUDA pursuant to preliminary discussions, took a paper publication for a use of lands in respect of schedule 6 Com.A.P.No.129/2023 properties on 04.08.2007. The original landlords filed objections before MUDA based on the paper publication opposing the use of schedule properties. The Govt. has passed an order on 03.04.2012 by converting the land from agriculture to residential use with certain conditions. MUDA for the land conversion issued an endorsement on 23.04.2012 for the petitioner to pay a sum of Rs.5,00,350/-.
(c) At this juncture, the respondent No.5 without any cause, cancelled the GPA executed in favour of the petitioner. The respondent No.6 who was a representative of the claimant company colluded with respondent Nos.1 to 4 against the petitioner and revoked the JDA, the respondent Nos.1 to 4 deceived the petitioner by not just revoking the JDA, but, they have also entered into a fresh JDA with respondent No.6 on 30.05.2015. The respondent Nos.1 to 4 in connivance with respondent No.6 sold Three sites by way of Sale Deed dated 02.07.2015 in favour of the respondent No.9 and Three sites in favour of respondent No.10.
(d) Aggrieved by the cancellation of the JDA and GPA, the petitioner approached the Hon'ble High Court by filing CMP No.246/2016 for appointment of an Arbitrator to adjudicate the dispute. The Hon'ble High Court on 09.11.2020 appointed an Arbitrator to adjudicate the matter. The first hearing was undertaken on 23.11.2021 when the petitioner had already filed its claim statement. The respondent No.2 on the same day also brought to the attention of petitioner that the respondent No.1 had passed away and the Tribunal directed the petitioner to make 7 Com.A.P.No.129/2023 necessary changes in the cause tittle and adjourn the matter to 10.12.2021. On that day, the petitioner filed an application seeking paper publication. The matter was posted to 13.01.2022, on that day, the respondent No.5 appeared through his counsel and on 11.02.2022 the respondent No.11 filed an application through his Advocate seeking impleadment on the ground that he was an assignee from respondent No.1 to 6. The application was contested by respondent No.5, the Tribunal held that the respondent No.11 may not be a proper party, but, is a necessary party for the adjudication and allowed the IA.
(e) On 12.04.2022 at the request of the respondents, the case was adjourned to 05.05.2022, the petitioner was unrepresented by his counsel and the matter was adjourned to 19.05.2022. On the next date, the petitioner appeared in person. The respondent No.11 submitted that a compromise was being arrived at between the petitioner and the respondent Nos.2 to 4, 6 and 11. Accordingly, the respondent No.11 requested time. While negotiation to settle the disputes against the respondent Nos.2 to 4, 6 and 11 was undergoing. The learned arbitrator has framed Seven Issues on 12.07.2022.
(f) It is further pleaded that on 20.07.2022 the Advocate for the petitioner, respondent Nos.2 to 4, 6 and 11 filed a Compromise petition, signed by these persons and it was ordered that the respective parties had read the contents of the Compromise Petition and out of volition entered the compromise. The Tribunal noted in the order sheet that the parties have entered the Compromise only 8 Com.A.P.No.129/2023 to their extent of the lands and does not relate to the share of the respondent Nos.1 to 5. The petitioner undergo multiple surgeries because of ill-health and because of this there was a communication gap between the petitioner and his Advocate. Accordingly, the matter was posted to 23.09.2022, 14.10.2022 and 21.10.2022.
(g) It is further stated that on 21.10.2022, the petitioner was present, his Advocate was absent. Owing to the fact that the respondents having received by the respondent No.11 and the petitioner, the matter was adjourned to 07.11.2022. On that day, the respondent No.1 (a) to (c), respondent Nos.2 to 5, the owners of the properties submitted before the Tribunal that they were trying to arrive at a family settlement. Hence, the matter was adjourned to 24.11.2022. The parties, at this juncture, trying to resolve the dispute amicably and submitted that they had almost settled the matter amicably and were working on the shares based on the salable area under the Development plan. It was submitted that as far as the respondent No.5 is concerned, the parties had to salable area at the rate of 32% to the respondent No.11 and 68% to the respondent No.5. The matter was adjourned to 06.02.2023. Because of the surgeries, the petitioner was forced to be in bed rest. Hence, the petitioner was not attending before the Tribunal and he could not instruct his Advocate also. Resulted in absence of the petitioner and his counsel on 20.02.2023, the proceedings before the Tribunal on 27.03.2023 discussed the Compromise Petition filed before it. It was only a Compromise Petition between 9 Com.A.P.No.129/2023 the petitioner and respondent Nos.2 to 4, 6 and 11 and the claims as against the other respondents remained.
(h) It is further stated that in the absence of the claimant, the award came to be made on 17.04.2023. The arbitrator relying upon the Compromise Petition entered between the petitioner and the respondent Nos.2 to 4, 6 and 11 held that the claims as against the said respondents stood disposed of. The Tribunal erred in holding that the claims as against the respondent Nos.1, 5 and the rest not being the parties to the Compromise Petition stood rejected. The Tribunal on one hand relied upon the Compromise Petition, but, on the other hand, it has erred by not considering the claims against the respondent Nos.1 and 5 remained. The Issues framed was pending adjudication.
(i) The petitioner upon realization of the award passed an application on 07.06.2023 requesting the Tribunal to recall the award dated 17.04.2023, in so far as the respondent Nos.1 (a) to
(c) and 5 are concerned, against whom the claim still survives. The matter was heard on 27.06.2023 and rejected the application.
(j) The petitioner has filed this application on the following grounds -
(i) The Tribunal placed reliance on the Compromise Petition entered into between the petitioner and the respondent Nos.2 to 4, 6 and 11. The dispute as against the respondent No.1(a) to (c) and 5 still survives. The Tribunal erred by not considering the same. In the absence of the petitioner and his Advocate an award was made, 10 Com.A.P.No.129/2023 wherein it was held that the petitioner has failed to prosecute against the respondent Nos.1 (a) to (c) and 5 which is contrary to the actual on goings which can be deduced from the order sheet.
(ii) The petitioner from very beginning had established that it had only arrived at a compromise with respondent Nos.2 to 4, 6 and 11. The petitioner has not consented to not having any claims as against the respondent Nos.1 (a) to (c) and 5. The specific Issues have been framed for adjudication of the dispute as it still stands between the petitioner and the respondent Nos.1(a) to (c) and 5. The petitioner had to undergo multiple surgeries, hence, he could not attend the proceedings. The claimant had only relied upon a compromise petition to state and establish that the claims as against only respondent Nos.2 to 4, 6 and 11 had been settled by way of a Compromise.
(iii) The matter was posted for further chief of petitioner, wherein it was in the very interest of the petitioner to pursue the matter as against the remaining respondents. The petitioner's absence was wrongfully construed as his reluctance to pursue the matter and without giving an opportunity to present himself and the Tribunal has dismissed the claims for non prosecution. It is contrary to law and against the principles of natural justice. Hence, on these grounds and other grounds pray for allowing the petition as prayed.
3. After issuance of the notice, the respondent Nos.1(a),
(b), 2 to 4, 5 and 11 have made their appearance through their 11 Com.A.P.No.129/2023 respective counsel. The other respondents i.e. respondent Nos.6, 7 and 10 have not made their appearance in spite of service of notice, hence, they placed absent.
4. The respondent Nos.2 to 4, 1(a), (b) and 5 and respondent No.11 have filed their objections separately. The respondent Nos.2 to 4 in their statement of objections have denied most of the contents of the petition and admitted that the respondent Nos.1 to 5 are the owners of the schedule properties. They have also admitted the agreement between the parties. The respondent Nos.1 to 5 having share of the developed area with 55% of the interest vesting with them and remaining 45% with the petitioner. They have also admitted regarding the application filed by the petitioner before MUDA and Govt. order dated 03.04.2012 and also endorsement by MUDA for payment of Rs.5,00,350/-. They have also admitted the cancellation of GPA executed in favour of the petitioner by respondent No.5. The respondents also cancelled the JDA and entered into a fresh JDA with respondent No.6. They have also admitted appointment of the Arbitrator and death of respondent No.1.
It is further stated that, they have also admitted the proceedings before the learned Arbitrator. They have also admitted regarding the Compromise Petition. The JDA project is at a stage wherein these respondents are unable to enjoy the benefits of the development owing to respondent Nos.1 (a) to (c) and 5. Hence, prays for allowing the petition by setting aside the findings of the Tribunal against the respondent Nos.1(a) to (c) and 5.
12 Com.A.P.No.129/20235. The respondent No.5 has filed objections stating that he has also denied some of the contents of the application. The application is not maintainable and liable to be dismissed. It is further stated that the respondent No.5 is the lawful owner of the properties in Sy.Nos.206/1, 206/2 and 206/3 measuring 5.23 acres. The alleged JDA dated 23.03.2007 between the petitioner and the respondent Nos.1 to 6 stands cancelled and terminated by the registered Cancellation Deed. The GPA also cancelled.
It is further stated that the petitioner has not paid any amount to the MUDA, Mysuru. As per the JDA dated 23.03.2007, the petitioner had to develop the schedule properties/land within 10 months. But, till this day, even after lapse of 17 years the petitioner has not done any developmental work as per the said JDA. Hence, the respondent No.5 has rightly cancelled the GPA executed in favour of the petitioner. The respondent No.6 who was the Director of the petitioner company and respondent Nos.1 to 4 have revoked the JDA dated 23.03.2007 and respondent No.6 with respondent Nos.1 to 4 have entered into another fresh JDA with new name - 'Chamundi Sooru Nagar' only to the extent of their lands. It shows that there is a serious in-fights within the petitioner company between the Chairman and the Secretary and the respondent No.6.
It is further stated that the respondent No.5 is not aware of the sale of sites to respondent No.9 and 10. These alienation not binding on this respondent. There was no site sharing agreement between the parties. The respondent No.5 is not at all a party to the 13 Com.A.P.No.129/2023 JDA dated 30.05.2015. The petitioner has voluntarily not chosen to seek adjudication of his claim as per the earlier JDA of the year 2007. It has also not chosen to seek adjudication of any of its claim made in the claim petition as PW1 got the compromise petition marked as Ex.C1. He was cross examined by respondent No.5, 1(a) to (c) in A.C.No.126/2021. The petitioner has closed his case, there was no adjudication on any of the Issues framed in the claim petition, but, only recording compromise i.e. Ex.C1 through PW1. The respondent Nos.1(a) to (c) and this respondent are not the parties to the Compromise Petition. Hence, on these grounds prays for dismissal of the petition.
6. The respondent No.11 also filed his objections, he also denied some of the contents of the application. He has admitted most of the contents of the application also regarding JDA, ownership of the schedule properties and execution of GPA, filing application by the petitioner before MUDA and it asked the petitioner to pay some of Rs.5,00,350/-.
It is further stated that the respondent No.11 showed interest in the project and entered into MOU and Supplemental MOU on 08.07.2014 with the petitioner. In the MOU it is recorded that the petitioner by way of Sale Deed dated 09.01.2013 sold 2.00 lakhs Sq.ft. of sital area out of 45% share in the developer's share. The petitioner had entered into MOU with this respondent for development of residential layout in the JDA property at Rs.100 per Sq.ft. amounting to Rs.5.88 Crores.
14 Com.A.P.No.129/2023It is further stated that the petitioner filed CMP before the Hon'ble High Court of Karnataka and arbitrator was appointed. He has also admitted the proceedings before the Arbirtral Tribunal and filing application by him on 11.02.2022. The respondent No.5 refused to come for settlement. The respondent Nos.2 to 4 entered into a compromise petition with the petitioner and this respondent, who being the assignee was extremely instrumental. The compromise petition filed before the Tribunal, wherein it was expressly mentioned that the Compromise was only as against the respondent Nos.2 to 4, 6 and 11 as well as the petitioner. The JDA project is at a stage wherein the respondent Nos.2 to 4 are unable to enjoy the benefit of development owing to respondent Nos.1 (a) to (c) and 5. This respondent having entered MOU with the petitioner and purchased the extent of the property, he is affected. Hence, prays for dismissal of the application.
7. The learned counsel for the parties have submitted their arguments. Perused the records.
8. Based on the pleadings of the parties, the following Points arise for my consideration:-
1. Whether there are grounds to set aside the award passed against the respondent Nos.1 (a) to (c) and 5, by the learned Arbitrator?
2. What Order?15 Com.A.P.No.129/2023
9. My findings on the above points are :
Point No.1: In the affirmative Point No.2: As per the final Order for the following reasons.
REASONS
10. Point No.1: The learned counsel for the petitioner has submitted his arguments basing on the contents of the application and also statement of objections by the other side. He has drawn my attention towards the award passed by the learned Arbitrator. The award passed by the learned Arbitrator is against the public policy as contemplated under the provisions of Sec.34 of the Arbitration and Conciliation Act. Without appreciation of the claim made by the petitioner, the claim petition has been disposed of. The learned Arbitrator has not given any findings on the issues, though he has framed Seven Issues on 12.07.2022 and additional Issue on 20.07.2022. The learned Arbitrator without giving findings on these Issues, simply disposed of the petition on the basis of the compromise petition entered into between the petitioner / claimant and respondent Nos.2 to 4, 6 and 11. The claim against the other respondents with the petitioner is not settled. But, without giving opportunity, without recording the evidence, the learned Arbitrator has disposed of the petition and no other application or objection were considered.
11. He has further drawn my attention towards the order sheet/proceedings before the learned Arbitrator in A.C.No.126/2021. It is mentioned in the order sheet dated 16 Com.A.P.No.129/2023 27.06.2023 that, "this Tribunal on consideration of the evidence led by the parties has passed the award on 17.04.2023. Thereafter, Sri.Abhilash Raju V. presented a vakalath signed by Mr.Goutham Chand - claimant inter alia, seeking leave of this Tribunal to reopen the dispute and in this regard, he has filed Two applications (i) U/Sec.23 of the Arbitration and Conciliation Act 1996 and (ii) U/Sec.5 of the Limitation Act 1963. It is ordered that, "Once award is passed there remains nothing for the Arbitrator to adjudicate or decide. Apart from this, Mr.Chandrakanth Patel, learned counsel representing the claimant submits that, he has not issued any NOC to any other Advocate to appear for the Claimant." It is ordered that, "in view of the order having been already passed on merit and it is not the case of the applicant that, the claim is decided or adjudicated without hearing the parties". But, it is not correct. The learned Arbitrator has not decided the matter on merits, simply accepting the Compromise Petition filed on behalf of some of the respondents with the petitioner / claimant, which is not correct.
12. He has further drawn my attention towards the proceedings before the learned Arbitrator on various dates from 23.11.2021 to 27.03.2023. Some of the respondents were impleaded subsequently and the said applications came to be allowed. The proceedings dated 19.05.2022 shows that, "learned counsel for the respondent Nos.2 to 4 submits that, these respondents along with respondent No.11 and claimant have negotiated for partial settlement, and submits that, he will file appropriate settlement / compromise petition before this Tribunal 17 Com.A.P.No.129/2023 by the next date of hearing by serving the copy on the other side". On next hearing on 15.06.2022, the proceedings shows that, "learned counsel for the respondent No.11 submits that, the compromise between claimant, respondents 2 to 4, 6 and 11 is ready. He needs very short accommodation to file the same. Learned counsel for the respondent No.11 also submits that, efforts are being made to include the respondent No.5 for the compromise. However, the learned counsel for the respondent No.5 submits that, no such offer or proposal has come to respondent No.5."
13. The proceedings dated 12.07.2022 reads - While hearing this claim petition, learned counsel for the claimant submitted that, the claimant, respondents 2 to 4, respondent No.6 and respondent No.11 are negotiating for settlement of the dispute and the final stage of the settlement is in progress and likely to concluded in a week's time........." The Compromise Petition filed and marked at Ex.C1 on 20.07.2022 and matter was posted for cross examination of CW1, it is also shown in the proceedings dated 20.07.2022 and the matter was posted to 10.08.2022. The matter was adjourned from time to time to explore the possibility of settlement. The matter was posted for cross examination of PW1 or reporting settlement and posted to 07.11.2022. The matter was posted as a last chance on 01.03.2023 for cross examination of PW1 and also filed Compromise Petition in respect of part of the schedule property belonging to respondent No.5. So, the learned Arbitrator without considering all these facts and contentions of the parties, 18 Com.A.P.No.129/2023 simply closed the claim petition, on the basis of the Compromise petition, which is not correct.
14. On the other hand, the learned counsel for the respondent No.5 submitted that, the respondent No.5 was not a party to the Compromise petition - Ex.C1. The respondent Nos.2 to 4 are the brothers of respondent No.5 and respondent No.11 is not a party to any of the Agreements and he has not paid anything. He has pointed out towards the Compromise Petition entered into between the petitioner herein and the respondent Nos.2 to 4, 6 and
11. The learned Arbitrator granted sufficient time to lead the evidence. There are no grounds to consider the petition.
15. The learned counsel for the respondent Nos.2 to 4 also submitted his arguments and he too drawn my attention towards the Ex.C1. A Compromise petition was filed entered into between the petitioner herein and the respondent Nos.2 to 4, 6 and 11. Without any grounds, only to cause inconvenience to these respondents, the petitioner herein has filed this petition without any reasons and grounds.
16. The learned counsel for the respondent No.11 has pointed out that, the matter may be remitted back for fresh disposal. The respondent No.11 has no objections for remittance.
17. After hearing the learned counsel for the parties, I have gone through the contents of the application as well as objections filed by the other side. Some admitted facts are, the relationship 19 Com.A.P.No.129/2023 between the parties i.e. petitioner herein, respondent Nos.1 to 5 are the owners of the properties in dispute i.e. Sy.Nos.205, 291, 206/1, 206/2, 206/3, 207, 208/1, 204, 203, 198/2, 189/4. There was a JDA dated 23.03.2007 with the petitioner, same is a registered document. The share of the developed area with 55% with the respondent Nos.1 to 5 who are the owners and remaining 45% is with the petitioner who is the developer.
18. After perusing the proceedings, before the learned Arbitrator, some of the respondents joined subsequently by filing necessary applications. There was a compromise entered into between the petitioner herein and the respondent Nos.2 to 4, 6 and
11. The other respondents have not entered into any Agreement with the petitioner. The Ex.C1 is the compromise petition. The claimant No.2 - Goutham Chand is examined as CW1 on 20.07.2022 and Compromise petition is marked at Ex.C1. There is no cross examination on behalf of the respondent Nos.2 to 4, 6 and 11. There is cross examination on behalf of respondent No.5 and legal heirs of the deceased respondent No.1 on 01.03.2023. There is no cross examination on behalf of respondent No.11.
19. After perusing the award passed by the learned Arbitrator on 17.04.2023, the learned Arbitrator has framed Issues and additional Issues as referred above. Evidence of the petitioner / claimant No.2 though recorded and he is cross examined only on behalf of respondent No.5 who is one of the contesting respondent. On the basis of the Compromise petition, the learned Arbitrator has 20 Com.A.P.No.129/2023 decided the matter in terms of the compromise between the petitioner / claimant and the respondent Nos.2 to 4, 6 and 11 and drawn the award - "Claimant has to bear the cost of the respondent Nos.1 (a) to (c) and respondent No.5, as it has not prosecuted his claim against the said respondents and they were made to the participate and prosecute their case and spend their time, hence, proportionately, the claimant has to pay the cost of the respondents 1(a) to (c) and respondent No.5. Since, the claim petition is disposed of on the basis of compromise as per Ex.C1, no other application or objection are considered."
20. I have gone through the provisions of Sec.34 of Arbitration and Conciliation Act which reads as under -
"Sec.34 - Application for setting aside arbitral Award -
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-
section (3).
(2) An arbitral award may be set aside by the Court only if-
(a) the party making the application [establishes on the basis of the record of the arbitral tribunal that:] [Substituted 'furnishes proof that']
(i) a party was under some incapacity; or
(ii)the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or 21 Com.A.P.No.129/2023
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part;
(b) The court finds that -
(i) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or
(ii) the arbitral award is in conflict with the public policy of India."
21. After going through the materials on record, the petitioner herein entered into a JDA on 23.03.2007 pertaining to the immovable properties referred above mentioned in the schedule with the respondent Nos.1 to 5 who are the owners of these properties. Admittedly, the JDA is a registered document. As per 22 Com.A.P.No.129/2023 the Agreement, the owners of the lands get a share of the developed area with 55% and remaining 45% to the developer i.e. the petitioner herein. The respondent Nos.1 to 5 who are the owners of the properties also executed a GPA on the same day in favour of the petitioner.
22. As per the arbitration clause in the JDA, a sole Arbitrator
- respondent No.12 has been appointed. The learned Arbitrator has passed the award as stated supra that, "Claimant has to bear the cost of the respondent Nos.1(a) to (c) and respondent No.5, as it has not prosecuted his claim against the said respondents and they were made to the participate and prosecute their case and spend their time, hence, proportionately the claimant has to pay the cost of the respondents.1(a) to (c) and respondent No.5". It is only regarding bear the cost of these respondents.
23. A Compromise Petition U/Or XXIII Rule 3 of CPC was submitted before the learned Arbitrator by the claimant / petitioner herein and respondent Nos.2 to 4, 6 and 11. All these parties have agreed for the terms and conditions mentioned in the Compromise Petition. The other respondents did not joined the claimant/petitioner herein in the said Compromise Petition. After perusing the Compromise petition, the respondent Nos.2 to 4, 6 and 11 have settled the dispute with the claimant / petitioner herein and the respondent Nos.2 to 4 have admitted the JDA. The respondent No.11 got impleaded later. At the intervention of respondent No.11 he himself has paid the agreed settlement 23 Com.A.P.No.129/2023 amount to the earlier landowners to resolve the civil disputes. The respondent No.11 made huge investment for developmental activities. The parties who have entered into a Compromise, they have agreed the terms and conditions mentioned in the Compromise Petition. The legal heirs of the deceased respondent No.1 and respondent No.5 have not joined the Compromise Petition.
24. The say of the petitioner herein is that, the Arbitrator has not decided the petition in respect of the other respondents, other than the respondents who joined the Compromise Petition. After perusing the award, evidence of PW1 is not recorded by the learned Arbitrator. The Ex.C1 is the Compromise Petition. After perusing the proceedings in A.C.No.126/2021 before the learned Arbitrator - respondent No.12, he has framed Issues. No opportunity has been granted to the other respondents who had not joined the Compromise petition. The learned counsel for the respondent No.11 during his arguments, he has no objection for remitted back the matter for fresh disposal. The learned counsel for the respondent Nos.2 to 4 has supported the arbitral award, there are no grounds to remand the matter back. The say of the learned counsel for the respondent No.6 is that, he was not a party to the Compromise Petition - Ex.C1 and there is no dispute regarding the relationship between the respondent Nos.2 to 4 and 5. The respondent No.11 is not a party to the Compromise petition. But, it is not correct. The Compromise Petition entered into between the petitioner / claimant and respondent Nos.2 to 4, 6 and 11.
24 Com.A.P.No.129/202325. I have also gone through a decision held in Mutha Construction Vs Strategic Brand Solutions (I) Pvt. Ltd. (Special Leave Petition (Civil) No. 1105 Of 2022) -
"The principle that a court while deciding a petition under Section 34 of the Arbitration and Conciliation Act has no jurisdiction to remand the matter to the Arbitrator for a fresh decision. The principle that a court while deciding a petition under Section 34 of the Arbitration and Conciliation Act has no jurisdiction to remand the matter to the Arbitrator for a fresh decision would be applicable where the Appellate Court decides the application under Section 34 of the Act on merits - Even in a case where the award is set aside under Section 34 of the Act on whatever the grounds which may be available under Section 34 of the Act, in that case the parties can still agree for the fresh arbitration may be by the same arbitrator - When both the parties agreed to set aside the award and to remit the matter to the learned Sole Arbitrator for fresh reasoned Award, it is not open to contend that the matter may not be and/or ought not to have been remanded to the same sole arbitrator. would be applicable where the Appellate Court decides the application under Section 34 of the Act on merits - Even in a case where the award is set aside under Section 34 of the Act on whatever the grounds which may be available under Section 34 of the Act, in that case the parties can still agree for the fresh arbitration may be by the same arbitrator - When both the parties agreed to set aside the award and to remit the matter to the learned Sole Arbitrator for fresh reasoned Award, it is not open to contend that the matter may not be and/or ought not to have been remanded to the same sole arbitrator."25 Com.A.P.No.129/2023
26. In the case on hand, except respondent No.11, the other respondents who were not parties to the Compromise Petition have not consented for remand for the matter. Therefore, the prayer sought by the petitioner in respect of remand of the matter does not arise. The aforesaid decision is applicable to the case on hand. The Hon'ble Apex court in a decision held that, arbitral awards cannot be modified U/Secs.34 and 37 of Arbitration and Conciliation Act in [2024] 1 S.C.R. 281 in S.V. Samudram Vs State of Karnataka & Anr. Therefore, the question of modification of the award also does not arise.
27. The another prayer sought in the petition is partly set aside the award in so far as claims as against the respondent Nos.1(a) to (c) and 5. The award passed by the learned Arbitrator is only regarding bear the expenses of these respondent Nos.1 (a) to (c) and 5.
28. In view of the discussions made supra and after going through the materials on record, proceedings before the learned Arbitrator, the learned Arbitrator has not decided the claim petition filed by the claimant / petitioner herein against the respondents therein, though the respondent No.5 has filed objections. His claim as well as the claim of the legal heirs of the deceased respondent No.1 is remained as it is. After going through the cross examination of PW1, it shows that, "This Compromise Petition is in exclusion of undivided share of respondent No.1(a) to 1(c) and respondent No.5". And he has further stated and admitted that, "May be that 26 Com.A.P.No.129/2023 item No.2, 6, 8 of the Compromise Petition belonging to Late Mittal. May be the property belonging to Late Mittal, the respondent No.5 has got undivided share". The learned Arbitrator has observed that, "Since the claimant has not chosen to seek adjudication of its claim petition of any of the issues raised in this claim petition nor has led any evidence on merit, further respondent No.1 (a) to (c) and respondent No.5 being not parties to the Compromise Petition nor the claim against them has been prosecuted by the claimant. The claim petition in so far as respondent Nos.1(a) to (c) and respondent No.5 stands rejected."
29. The learned Arbitrator ought to have give an opportunity to the claimant / petitioner herein to submit his say in respect of the legal heirs of the deceased respondent No.1 i.e. respondent Nos.1(a) to (c) and 5 who has filed the statement of objections. Therefore, in my opinion "it is in conflict with the most basic notions of morality or justice" as contemplated in Sec.34(2)(b) in Explanation-1 (iii) of the Arbitration and Conciliation Act and as per the provisions of Sec.34(2)(b)(ii) of the Act that, "the arbitral award is in conflict with the public policy of India". Therefore, the award passed by the learned Arbitrator cannot be remitted back and even modified, but, it can be set aside. In view of the discussions made herein, the petitioner has made some grounds to set aside the award in respect of the claims of the respondent No.1(a) to (c) and respondent No.5. Accordingly, I answer the Point No.1 in the affirmative.
27 Com.A.P.No.129/202330. Point No.2: In the result, I pass the following:
ORDER The petition U/Sec.34 (2)(b)(ii) and Sec.34(2A) of the Arbitration and Conciliation Act is hereby allowed.
The arbitral award passed by the learned Arbitrator in A.C.No.126/2021 dated 17.04.2023 is hereby set aside against the claims of respondent Nos.1
(a) to (c) and respondent No.5.
Issue copy of the judgment to the parties through e-mail as provided U/Or XX Rule 1 of CPC, if email ID is furnished.
(Dictated to the stenographer, typed by her directly on the computer system, corrected and then pronounced by me in the open court on this the 21st day of October 2024) \ (RAMAKANT CHAVAN) LXXXIV Addl. City Civil & Sessions Judge, (CCH-85) Commercial Court, Bengaluru.