Karnataka High Court
Pride And Expert Properties Private ... vs G. R. Nataraj on 25 September, 2023
Author: B M Shyam Prasad
Bench: B M Shyam Prasad
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NC: 2023:KHC:34900
CMP No. 282 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF SEPTEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE B M SHYAM PRASAD
CIVIL MISC. PETITION NO. 282 OF 2023
BETWEEN:
PRIDE AND EXPERT PROPERTIES
PRIVATE LIMITED
A COMPANY INCORPORATED UNDER
THE COMPANIES ACT 1956
HAVING THEIR OFFICE AT
901, 9TH FLOOR, PRIDE HULKUL,
NO.116 LAL BAGH MAIN ROAD
BENGALURU,
KARNATAKA - 560027
REPRESENTED THROUGH ITS DIRECTOR,
MR. B.R. RAVINDRA.
...PETITIONER
(BY SRI. P CHINNAPPA., WITH
Digitally MS. RITHIKA R.K., AND MS. TANISHA SUNIL,
signed by
NARASIMHA ADVOCATES)
MURTHY
VANAMALA AND:
Location:
HIGH
COURT OF 1. G. R. NATARAJ
KARNATAKA 11 KILOMETRE,
DODDAKALLASADRA
JP NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
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NC: 2023:KHC:34900
CMP No. 282 of 2023
ALSO AT.
APARTMENT NO.Z-001,
WILASA GRAND VILLAMENTS,
12TH KILOMTRE,
DODDAKALLASANDRA
JP NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
2. SUNEETHA NATARAJ
11 KILOMETRE,
DODDAKALLASADRAN
JP. NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
ALSO AT.
APARTMENT NO.Z-001,
WILASA GRAND VILLAMENTS,
12TH KILOMTRE,
DODDAKALLASANDRA
JP NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
3. G.R. CHETAN
11 KILOMETRE,
DODDAKALLASANDRA
JP NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
ALSO AT.
APARTMENT NO.Z-401,
WILASA GRAND VILLAMENTS,
12TH KILOMTRE,
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NC: 2023:KHC:34900
CMP No. 282 of 2023
DODDAKALLASANDRA
JP NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
4. G.R. CHARAN
11 KILOMETRE,
DODDAKALLASANDRA
JP NAGAR, 9 PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
ALSO AT.
APARTMENT NO.Z-404,
WILASA GRAND VILLAMENTS,
12TH KILOMTRE,
DODDAKALLASANDRA
JP NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
5. G.R. SHARAN
11 KILOMETRE,
DODDAKALLASANDRA
JP NAGAR, 9 PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
ALSO AT:
APARTMENT NO.Z-403,
WILASA GRAND VILLAMENTS,
12TH KILOMTRE,
DODDAKALLASANDRA
JP NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
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NC: 2023:KHC:34900
CMP No. 282 of 2023
6. VIDYA MALLIK
11 KILOMETRE,
DODDAKALLASANDRA
JP NAGAR, 9 PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
ALSO AT.
19040 PORTOS DRIVE
SARATOGA, CALIFORNIA
USA -5070.
ALSO AT.
APARTMENT NO.Z-403,
WILASA GRAND VILLAMENTS,
12TH KILOMTRE,
DODDAKALLASANDRA
JP NAGAR, 9TH PHASE,
KANAKAPURA ROAD,
BENGALURU - 560062.
7. M/S TANVI ASSET HOLDING LLP
2ND FLOOR, COMMERCIAL BLOCK
RAJA FARMS, 11 KILOMETRE,
DODDAKALLASANDRA
JP NAGAR, 9TH PHASE,
KANAKAPURA, BENGALURU - 560062.
...RESPONDENTS
(VIDE ORDER DATED 28.08.2023;
SRI. SIDDHARTH SUMAN, ADVOCATE FOR R1, R2, R4,
R5 & R6; SRI. NIKIT BALA, ADVOCATE FOR R3;
SRI. SURAJ SAMPATH, ADVOCATE FOR R7)
THIS CIVIL MISC. PETITION IS FILED UNDER
SEC.11(5) R/W SECTION 15 OF THE ARBITRATION AND
CONCILIATION ACT 1996, PRAYING TO APPOINT THE
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CMP No. 282 of 2023
HONBLE MR. JUSTICE JOHN MICHAEL D CUNHA
(RETD.) AS THE LD. SUBSTITUTE SOLE ARBITRATOR,
TOWARDS RECONSTITUTION OF THE ARBITRAL
TRIBUNAL IN VIEW OF THE ORDER OF RECUSAL
DATED 29/12/2022 PASSED BY THE PRECEDING SOLE
ARBITRATOR, TO CONTINUE WITH THE ARBITRAL
PROCEEDINGS FOR THE ADJUDICATION AND FINAL
DETERMINATION OF ALL CLAIMS AND DISPUTES OF
THE PETITIONER AND THE RESPONDENTS, IN TERMS
OF CLAUSE 15 AT AGREEMENT DATED 19/05/2012
(ANNEXURE-A).
THIS PETITION, COMING ON FOR ADMISSION,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The short question for consideration in this petition is whether there must be appointment of a substitute arbitrator. It is undisputed that the petitioner and the first to sixth respondents are parties to the Agreement dated 19.05.2012 and in terms of this agreement and the agreement for arbitration as contained therein, a former Judge of this Court has entered reference of the dispute and midway during the proceedings, the learned arbitrator has chosen to withdraw. The reasons for -6- NC: 2023:KHC:34900 CMP No. 282 of 2023 the same will not be of consequence, and therefore, not detailed.
2. If the learned counsel for the petitioner argues for appointment of a former Judge of this Court as a substitute arbitrator, the learned counsels for the respondents, except the learned counsel for the third respondent, object to the appointment of a substitute arbitrator on the following grounds. Sri.Siddarth Suman, the learned counsel for the first, second and fourth to sixth respondents, argues that the request for appointment of a substitute arbitrator must be rejected for the following grounds:
(i) The agreement dated 19.05.2022 relied upon by the petitioner is not duly stamped, and if the agreement is not duly stamped, it cannot be acted upon for re-
appointment of a substitute arbitrator. The reliance is placed -7- NC: 2023:KHC:34900 CMP No. 282 of 2023 upon the decision of the Hon'ble Supreme Court in N.N. Global Mercantile Private Limited v.
Indo Unique Flame Ltd. and Others1.
(ii) If this Court is inclined despite the aforesaid objections to appoint a substitute arbitrator, this Court may direct de novo enquiry before the substituted arbitrator.
3. Sri Suraj Sampath, the learned counsel for the seventh respondent, submits that the seventh respondent is not a party to the agreement dated 19.05.2021 and the dispute, even if any, could only be between the petitioner and the other respondents and as such, this Court must observe that the adjudication of the dispute by the substituted 1 2023 SCC OnLine SC 495 -8- NC: 2023:KHC:34900 CMP No. 282 of 2023 arbitrator be only as between the petitioner and the other respondents. However, Sri Suraj Sampath cannot dispute that the seventh respondent has participated in the earlier arbitral proceedings in filing response and in fact, an application for deletion of this respondent is rejected by the learned arbitrator in the arbitral proceedings. In these circumstances, this objection cannot be sustained, and the seventh respondent must be at liberty, subject to just exceptions in law, to urge all grounds in the arbitral proceedings in the event substitute arbitrator is appointed and in the later proceedings.
4. The Agreement dated 19.05.2021 is admitted in evidence and without objection on the sufficiency of the stamp duty. This question of sufficiency of stamp duty must be examined in the light of the provisions of Section 34 of the Karnataka Stamp Act, 1957, subject to any review that would be permissible under Section 58 thereof. In fact, in -9- NC: 2023:KHC:34900 CMP No. 282 of 2023 similar circumstances viz. the petition for appointment of a substituted arbitrator for adjudication of the dispute inter se the petitioner and the respondents in CMP No.192/2023, this Court has observed as follows:
"On whether there must be de novo enquiry, or the enquiry must start from where the proceedings are stopped before the learned arbitrator, this Court must, as canvassed by Sri Suraj Sampath, leave open the question to be decided by the substitute arbitrator as contemplated under Section 15(3) of the Arbitration Act.
This Court is of the view that the objection on the stamp duty cannot prevail at this stage. As such, the objections canvassed by Sri Siddarth Suman cannot prevail.
5. The other question, as raised by Sri. Nikit Bala, the learned counsel for the third respondent, is whether the learned substitute arbitrator appointed by this Court to enter reference of the dispute inter se
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NC: 2023:KHC:34900 CMP No. 282 of 2023 the petitioner and respondents in CMP No.192/2023 must be appointed even in the present case or must not be in view of the provisions of Paragraph 24 of Schedule V of the Arbitration Act 2. Sri. Nikit Bala submits that the rule cited could be one of the grounds urged under Section 34 of the Arbitration Act, and in that event the appointment, and the outcome out of the arbitral proceedings, could be tenuous.
6. The merit of this contention is examined in the light of the following circumstances. A concise statement of the dispute in the proceedings in CMP No.192/2023 is whether the seventh respondent3 is entitled to receive certain Market Facilitation Fee from 2 Paragraph 24: The arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration or related issue involving one of the parties or an affiliate of one of the parties. 3 In the present proceedings, the seventh respondent's contention is that notice issued does not indicate the dispute with the seventh respondent.
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NC: 2023:KHC:34900 CMP No. 282 of 2023 the other respondents, and in the present case, the question is whether the petitioner would be entitled for Project Management Fee, and further, if the petitioner asserts certain percentage of the Gross Revenue from the sale, the seventh respondent asserts it is based on the Net Revenue. The agreements with the petitioner and the seventh respondent relate to the same project.
7. This Court must opine that there will have to be a compendious adjudication as against a segregated adjudication, so that all aspects are considered without divergence in similar circumstances. Furthermore, a common learned arbitrator has earlier entered reference of both the disputes by consensus of the parties and therefore, there can reason to invoke the rule of bias as contained in Rule 24 in Schedule V of the Arbitration Act if the same learned Arbitrator is appointed even in this proceedings. This Court in CMP No. 192/2023
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NC: 2023:KHC:34900 CMP No. 282 of 2023 has appointed Hon'ble Mr. P. Krishna Bhat, a former Judge of this Court, as the sole arbitrator and his Lordship must be appointed as the sole arbitrator even in this petition. Hence, the following:
ORDER
a) The petition is allowed, and Hon'ble Mr. Justice P. Krishna Bhat, a former Judge of this Court, Address: "Vasishta", No.41, Near Ganesh Emerald, Judicial Layout 3rd Phase, Hejjala, Bidadi, Bengaluru - 562 109 [email: [email protected]], is appointed as the sole arbitrator to enter reference of the dispute between the petitioners and respondents and conduct the proceeding at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules governing the Arbitration and Conciliation Centre (Domestic and International), Bengaluru.
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b) The Registry is directed to communicate this order [through email] to the Arbitration and Conciliation Centre (Domestic and International), Bengaluru and Hon'ble Mr. Justice P. Krishna Bhat, a former Judge of this Court, Address: "Vasishta", No.41, Near Ganesh Emerald, Judicial Layout 3rd Phase, Hejjala, Bidadi, Bengaluru-562-109 [email:[email protected]] as required under the Appointment of Arbitrators by the Chief Justice of Karnataka High Court Scheme, 1996.
Sd/-
JUDGE SA ct:sr