Karnataka High Court
Abhyudaya Educational Trust vs Shree Gangadhareshewara Educational ... on 29 May, 2023
Author: R Devdas
Bench: R Devdas
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CMP No. 80 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 29TH DAY OF MAY, 2023
BEFORE
THE HON'BLE MR JUSTICE R DEVDAS
CIVIL MISC. PETITION NO. 80 OF 2023
BETWEEN:
ABHYUDAYA EDUCATIONAL TRUST
A PUBLIC CHARITABLE TRUST
FORMED UNDER THE INDIAN TRUSTS ACT 1882
HAVING ITS REGISTERED OFFICE
AT NO 208, WEST MINISTER BUILDING NO 13
CUNNINGHAM ROAD
BENGALURU 560052
REPRESENTED HEREIN BY ITS
MANAGING TRUSTEE MR M KRISHNA
...PETITIONER
Digitally signed
by JUANITA (BY SRI. KASHYAP N NAIK., ADVOCATE)
THEJESWINI
Location: HIGH
COURT OF AND:
KARNATAKA
SHREE GANGADHARESHEWARA EDUCATIONAL TRUST
A PUBLIC CHARITABLE TRUST FORMED
UNDER THE INDIAN TRUSTS ACT 1882
HAVING ITS REGISTERED OFFICE AT
NO 199, SHANTIDHAMA
SUNKADAKATTE, MAGADI MAIN ROAD
BENGALURU 560091
REPRESENTED HEREIN BY ITS TRUSTEE/
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CMP No. 80 of 2023
VICE PRESIDENT MR DHANANJAYA G
...RESPONDENT
(BY SRI. RAKESH B BHATT., ADVOCATE
SRI. YASHWANT POOJAR, ADVOCATE)
THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER
SEC.11(6) OF THE ARBITRATION AND CONCILIATION ACT
1996, PRAYING TO APPOINT HONBLE SHRI. JUSTICE ASHOK B.
HINCHEGERI (RETD. JUDGE, HIGH COURT OF KARNATAKA) OR
ANY OTHER PERSON THAT THIS HONBLE COURT MAY DEEM
FIT, AS THE SOLE ARBITRATOR TO ADJUDICATE THE
DISPUTES THAT HAVE ARISEN BETWEEN THE PARTIES OUT OF
LEASE DEED DATED 14.02.2022 (ANNEXURE A) AS PER
CLAUSE IS HEREIN AND ETC.,
THIS CIVIL MISCELLANEOUS PETITION COMING ON FOR
ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
R.DEVDAS J., (ORAL):
This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as 'the Act' for short) seeking -3- CMP No. 80 of 2023 appointment of a sole Arbitrator to adjudicate the disputes arising out of the Lease Deed dated 14.02.2022.
2. The petitioner-Trust which is the absolute owner of 4 acres of land in Sy.No.26/4 (Old Sy.No.26/1) situated at Chikkabellanduru Village, Varthur Hobli, Bangalore East Taluk, is before this Court invoking the arbitration clause contained in the lease deed dated 14.02.2022. Under the lease deed, the respondent-Trust became the lessee of the premises which also contained a building which was earlier an educational institution run by the petitioner-Trust consisting of 143557 sq. ft. of built-up area comprising of A, B and C Blocks, playgrounds, parking area and open area. The respondent had agreed to pay the monthly rents of Rs.28,71,140/- approximately calculated at the rate of Rs.20/- per sq. ft. of the built-up area.
3. The parties had entered into a rectification deed dated 30.07.2022, which is again a registered instrument, clarifying the monthly rents payable by the lessee to the lessor and the date of commencement. Nevertheless, the -4- CMP No. 80 of 2023 respondent got issued a legal notice dated 10.11.2022 stating that the respondent had carried out certain works to the premises and that it will pay the property tax of the premises to the BBMP and therefore, the amounts incurred by the respondent should be adjusted towards the monthly rentals. Nevertheless, the petitioner got issued a legal notice dated 22.11.2022 at Annexure 'F' terminating the lease deed on the ground that the respondent had defaulted to comply with the terms of the contract and it failed to pay the rentals as agreed. On the same day, the petitioner also gave a reply to the notice of the respondent dated 10.11.2022 denying the contentions of the respondent. Thereafter, on 07.01.2023 the petitioner got issued a notice invoking the arbitration clause under the lease deed and proposed to appoint a learned retired Judge of this Court as a sole arbitrator in terms of the arbitration clause calling upon the respondent to confirm the nomination of the arbitrator within the stipulated time. Since the respondent did not come forward to accept the -5- CMP No. 80 of 2023 nomination made by the petitioner or propose any other arbitrator, this Civil Miscellaneous Petition has been filed.
4. Statement of objections have been filed at the hands of the respondent denying the allegations made by the petitioner. The respondent has also filed I.A.No.1/2023 seeking to implead M/s.JM Financial Asset Reconstruction Company Limited, on the ground that the said Financial Institution had initiated recovery proceedings against the petitioner-Trust before the Debts Recovery Tribunal, Bangalore, in R.C.No.11951/2017 in O.A.No.138/2013 and Recovery Officer exercising the powers under Section 28(2) and (3) of the Recovery of Debts and Bankruptcy Act, 1993, had attached the rents payable to the petitioner and ordered that the rents shall be deposited with the Tribunal.
5. It is the submission of the learned Counsel for the respondent that consequently, the respondent-Trust was forced to deposit the rents either before the Tribunal or with the said Financial Institution. Learned Counsel for the -6- CMP No. 80 of 2023 respondent would therefore submit that when once the assets of the petitioner-Trust were taken over by the competent authority, the petitioner cannot invoke the arbitration clause. Further, it is submitted that this Civil Miscellaneous Petition cannot be decided in the absence of the said Financial Institution which has secured an order under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of the property in question.
6. In this regard, learned Counsel for the petitioner submits that a rejoinder to the statement of objections has been filed by the petitioner-Trust. It has been stated that the statement made in the application in I.A.No.1/2023 is far from truth. It is submitted that the respondent is only trying to wriggle out of the situation in the guise of trying to implead a third party who is a non-signatory to the lease deed. It is submitted that the respondent has not paid any rents either to the petitioner-Trust or to the -7- CMP No. 80 of 2023 Debts Recovery Tribunal or the Financial Institution as sought to be claimed before this Court. Moreover, it is submitted that if a third party Financial Institution has secured certain orders at the hands of the Debts Recovery Tribunal and there is a direction by the Tribunal to the respondent to deposit the rents before the Tribunal, the respondent-Trust may continue to do so. However, on instructions, it is submitted that the respondent-Trust has not deposited any rents even before the Tribunal or before the Financial Institution as claimed therein. Nevertheless, it is submitted that the petitioner-Trust will defend its action invoking arbitration clause before the arbitration clause and the petitioner-Trust is not averse to the said Financial Institution being impleaded before the Arbitral Tribunal. At any rate, it is submitted that in a proceeding under Section 11 of the Act, the said Financial Institution cannot be a necessary party to decide the question of appointment of a sole arbitrator, to decide the lis between the petitioner and the respondent-Trust. -8- CMP No. 80 of 2023
7. The thrust of the argument of the learned Counsel is that if the respondent-Trust had paid the rents as agreed and in view of the subsequent orders passed by the Debts Recovery Tribunal, if the respondent-Trust continues to deposit the rents before the Tribunal, the problem faced by the petitioner-Trust would have been eased to a major extent. It is submitted that because the respondent-Trust did not pay the rents to the petitioner- Trust, the petitioner-Trust is now put in the docks having to face the disputes raised at the hands of the Financial Institution.
8. Having heard the learned Counsels and on perusing the petition papers, this Court finds that the respondent-Trust does not dispute the fact that there is a registered lease deed between the parties and that the petitioner-Trust is the lessor under the agreement. It is also not disputed that the respondent-Trust had agreed to pay a certain rent for usage of the premises belonging to the petitioner-Trust. However, what is sought to be -9- CMP No. 80 of 2023 canvassed at the hands of the respondent-Trust is that by virtue of the orders passed by the Debts Recovery Tribunal, it is now required to deposit the rents before the Tribunal. However, what is required to be noticed is that the petitioner-Trust got issued a legal notice on 22.11.2022 claiming arrears of rents to the tune of Rs.1,37,33,234.98/-. Although the respondent-Trust seeks to place reliance on a document at Annexure 'R1' filed along with the statement of objections that the Presidents of the two Trusts had agreed that what is due from the respondent-Trust is only Rs.33,09,690/- and not the sum claimed in the legal notice dated 22.11.2022, nevertheless, learned Counsel for the petitioner-Trust submits that, that document does not contain the seal and signature of the Trust and the authorized signatories of the Trusts. Nevertheless, it is submitted that these are all questions that are required to be considered by the Arbitral Tribunal and this is the bone of contention between the parties.
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CMP No. 80 of 2023
9. What is required to be considered by this Court is whether the application I.A.No.1/2023 filed by the respondent-Trust is required to be allowed, to implead a non-signatory to the agreement to consider this petition filed under Section 11(6) of the Act.
10. In the considered opinion of this Court, if the said Financial Institution has any claim in respect of the property belonging to the petitioner-Trust, it may be permitted to make its claim before the Arbitral Tribunal consequent to the orders passed by the competent Court or the Tribunal. For that purpose, the respondent-Trust is permitted to make such an application before the Arbitral Tribunal and the Arbitral Tribunal may consider the application and dispose of the same in accordance with law. Liberty is reserved to the respondent-Trust to make such an application before the Arbitral Tribunal as stated hereinabove.
11. At any rate, for consideration of this petition filed under Section 11 of the Act, there is no need to bring the
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CMP No. 80 of 2023said Financial Institution before this Court for consideration of the prayer made in the petition. Accordingly, the application filed at the hands of the respondent-Trust in I.A.No.1/2023 stands disposed of.
12. All contentions are left open.
13. Consequently, this Court proceeds to pass the following order:
ORDER
(a) The Civil Miscellaneous Petition is allowed appointing Shri Ram Mohan Reddy, Former Judge, High Court of Karnataka, as the sole arbitrator to enter reference of the disputes between the petitioner and the respondents and conduct proceeding at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules governing the said Arbitration Centre.
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CMP No. 80 of 2023
(b) All contentions inter se parties are left open for adjudication in the arbitration proceedings.
(c) The office is directed to communicate this order to the Arbitration and Conciliation Centre and to Shri Ram Mohan Reddy, Former Judge, High Court of Karnataka, as required under the Arbitration and Conciliation Centre Rules, 2012.
Sd/-
JUDGE JT/-