Karnataka High Court
Mrs Jayanthi Shivaram Hegde vs Sri G R Nataraj on 12 October, 2023
Author: B M Shyam Prasad
Bench: B M Shyam Prasad
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NC: 2023:KHC:37336
CMP No. 825 of 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF OCTOBER, 2023
BEFORE
THE HON'BLE MR JUSTICE B M SHYAM PRASAD
CIVIL MISC. PETITION NO. 825 OF 2022
BETWEEN:
1. MRS JAYANTHI SHIVARAM HEGDE
W/O MR.S.S.HEGDE
AGED 65 YEARS,
2. MR.S.S.HEGDE
S/O MR.SHESHAPPA MUTHIAH HEGDE,
AGED 82 YEARS,
PETITIONERS NO. 1 AND 2
R/AT NO.303, SHESH KRUPA
6TH MAIN, HAL 2ND STAGE,
INDIRANAGAR,
BANGALORE-560038.
...PETITIONERS
(BY SRI. ANIL KUMAR SHETTY, ADVOCATE)
Digitally
signed by AND:
NARASIMHA
MURTHY
VANAMALA 1. SRI G R NATARAJ
Location: S/O LATE RAJAIAH SETTY,
HIGH
COURT OF AGED 71 YEARS,
KARNATAKA
2. SMT.SUNEETHA NATARAJ
W/O SRI.G.R.NATARAJ,
AGED 60 YEARS,
BOTH 1 & 2 ARE R/AT Z001,
WILASA GRAND VILLAMENTS
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NC: 2023:KHC:37336
CMP No. 825 of 2022
12TH KM, KANAKAPUA ROAD,
DODDAKALLASANDRA,
KONANAKUNTE CROSS,
J.P.NAGAR, 9TH PHAE
BENGLAURU-560062.
3. SRI.CHETAN G.R.
S/O SRI G.R.NATARAJ
AGED 40 YEARS,
WILASA GRAND VILLAMENTS
2ND FLOOR, COMERCIAL BLOCK
11TH KM, RAJA FARM ROAD,
KANAKAPURA ROAD,
DODDAKALLASANDRA,
KONANAKUNTE CROSS,
JP NAGAR 9TH PHASE,
BENGALURU-560062.
4. SRI.CHARAN G.R.
S/O SRI G.R.NATRAJ
AGED 34 YEARS,
Z404, WILASA GRAND VILLAMENTS
2ND FLOOR, COMERCIAL BLOCK
11TH KM, RAJA FARM ROAD,
KANAKAPURA ROAD,
DODDAKALLASANDRA,
KONANAKUNTE CROSS,
JP NAGAR, 9TH PHASE,
BENGALURU-560062.
5. SRI.SHARAN G.R.
S/O SRI G.R.NATARAJ
AGED 34 YEARS,
302, 3RD FLOOR, 645/2, 17TH CROSS,
5TH MAIN, BINNAMANGALA 2ND STAGE,
INDIRANAGAR, BENGALURU-560038.
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NC: 2023:KHC:37336
CMP No. 825 of 2022
6. SMT.VIDYA MALLIK
D/O SRI.G.R.NATARAJ,
AGED 44 YEARS,
Z004, WILASA GRAND VILLAMENTS
12TH KM, KANAKAPURA ROAD,
DODDAKALLASANDRA,
KONANAKUNTE CROSS,
J.P.NAGAR 9TH PHASE,
BENGALURU-560062.
7. M/S. TANVI ASSETS HOLDINGS LLP
A PARTNERSHIP FIRM HAVING ITS OFFICE AT
"ARNAV", 17, 9TH MAIN, 2ND BLOCK,
JAYANAGAR, BANGALORE-560 011
REPRESENTED BY ITS DESIGNATED
PARTNER SRI CHETAN G.R.
8. M/S. PRIDE AND EXPERT PROPERTIES
PRIVATE LIMITED
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF
COMPANIES ACT, 1956 AND HAVING ITS
REGISTERED OFFICE AT 901, 9TH FLOOR,
PRIDE HULKUL,
116, LALBAGH ROAD,
BANGALORE-560 027
REPRESENTED BY ITS DIRETOR
SRI.B.R.RAVINDRA.
...RESPONDENTS
(BY SRI. SIDDHARTH SUMAN.,ADVOCATE FOR R1, R2,
R4 TO R6;
SMT. VARSHA HITTINHALLI, ADVOCATE FOR R3;
SRI. SURAJ SAMPATH, ADVOCATE FOR R7;
SRI. P CHINNAPPA, ADVOCATE A/W MS. RITHIKA
RAVIKUMAR, ADVOCATES FOR R8)
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NC: 2023:KHC:37336
CMP No. 825 of 2022
THIS CIVIL MISC. PETITION IS FILED UNDER
SEC.11(6) OF THE ARBITRATION AND CONCILIATION
ACT 1996, PRAYING TO APPOINT AN ARBITRATOR AS
PER THE PROVISIONS OF SECTION 11(6) OF THE
ARBITRATION AND CONCILIATION ACT, 1996 AND
REFER THE DISPUTE BETWEEN THE PARTIES TO THE
ARBITRATOR TO SETTLE THE SAME AS PER THE
TERMS OF THE AGREEMENT OF SALE DATED
19/11/2015, VIDE ANNEXURE-A.
THIS PETITION, COMING ON FOR ADMISSION,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioners are before this Court under Section 11 of the Arbitration and Conciliation Act, 1996 [for short, 'the Arbitration Act'] for the appointment of a sole arbitrator. It is undisputed that the petitioners have agreed to purchase a residential apartment under the Agreement to Sell dated 19.11.2015 which is signed by all the respondents in their different capacities given the respective agreements inter se for development of the subject immovable property. The seventh and eighth -5- NC: 2023:KHC:37336 CMP No. 825 of 2022 respondents are parties to the arbitral proceedings commenced inter se with they agreeing on the appointment of a sole arbitrator, but with such sole arbitrator recusing because of circumstances, this Court, in the respective petitions, is called upon to appoint a substitute arbitrator. These petitions are disposed of appointing a former Judge of this Court as the sole arbitrator.
2. According to the petitioners, during the pendency of the arbitral proceeding before the sole arbitrator recused, the fifth respondent has addressed communications, on behalf of the first to sixth respondents [the land owners of the property that is developed with the seventh and eighth respondents' participation] and he has offered to cause execution and register a conveyance deed for the subject property on behalf of all the other respondents.
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3. Sri Anil Kumar Shetty, the learned counsel for the petitioners, relying upon the aforesaid circumstances as also the notice dated 24.06.2022 issued invoking the arbitration clause, submits that the fifth respondent's communication is after the orders of the learned Arbitrator permitting the sale of the subject apartment, and therefore, it would be just and reasonable to allow the petition appointing the sole arbitrator.
4. Sri Siddharth Suman, the learned Counsel for the respondent Nos.1, 2, 4 to 6, submits that even according to the notice dated 24.06.2022, the petitioners' cause of action stands lapsed after the expiry of 42 months [36 + 6 months] from the date of the agreement i.e., 19.11.2015 and the present notice is issued in the month of June 2022, and as such, the claim for specific performance is time-barred. Sri Siddharth Suman, to buttress his submissions, proposes to rely upon the decision of the Hon'ble -7- NC: 2023:KHC:37336 CMP No. 825 of 2022 Supreme Court in B and T AG vs. Ministry of Defense reported in 2023 SCC OnLine SC 657.
5. Sri Suraj Sampath, the learned counsel for the seventh respondent, and Smt. Rithika Ravi Kumar, the learned counsel for the eighth respondent, submit that these respondents will not be necessary parties to the proceedings inasmuch as neither has disputed that the petitioners would be entitled for conveyance of the subject property and that they will, subject to the outcome of the proceedings that may be between the petitioners and the other respondents, be parties to such deed of conveyance. Therefore, these respondents cannot be drawn into arbitration proceedings.
6. Sri Suraj Sampath and Smt. Rithika Ravi Kumar emphasize that these respondents are constrained to participate in multiple proceedings despite the fact that they have not received the fee payable to them, and in fact, they submit that the seventh respondent has not received the fee at all and -8- NC: 2023:KHC:37336 CMP No. 825 of 2022 the eighth respondent has received some amount as settlement.
7. It is obvious from the above that the parties do not dispute the existence of the agreement for arbitration and the dispute is about whether the petitioners' claim for specific performance is ex facie time barred. If this Court is of the opinion that the dispute is not ex-facie time barred, whether the arbitral proceedings must be just between the petitioners and the first to sixth respondents. The question whether the petitioners' claim is ex facie time barred must necessarily be examined in the light of the provisions of clause (5) of the sale agreement which in its material part reads as under:
"5. The VENDOR duly agrees and covenants with the PURCHASER that they shall complete the construction of the residential apartment complex on the Schedule A Property on or before a period of 36 (thirty six) months with a further grace period of 6 (six) months from the date of obtaining the Commencement -9- NC: 2023:KHC:37336 CMP No. 825 of 2022 Certificate from the BBMP subject to force majeure conditions like earthquake, riots, famine, floods, war, any other acts of god or the happening of any events or enactments beyond the control of the VENDOR. The time for completion as stated above shall not include the time for obtaining the Occupancy Certificate from the BBMP and permanent power, sanitary and water connections from the statutory authorities and in the event of delay on this account the Purchaser shall not be entitled to claim any damages / losses etc., in any manner whatsoever against the VENDOR in this regard. However the VENDOR shall duly provide for temporary power and water connections to the Project at their cost till permanent connections are secured. The Vendor duly agrees and confirms that in case there is a delay in completion of construction beyond the period of 42 (Forty-Two) months from the date of obtaining the commencement certificate (including the grace period), the Purchaser will be entitled to a compensation calculated at Rs. 5 (Five) per sq.ft. of super built-up area comprised in the Schedule C Residential Apartment per month of delay or part thereof."
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8. The canvass on behalf of the first to sixth respondents is that notwithstanding these terms, which refer to the performance by the respondents, this Court must opine that the period of 36 + 6 months contemplated therein would be for completion of the conveyance of the subject property because that is what is stated in the legal notice dated 24.06.2022. The reliance in this regard is on the following in the legal notice dated 24.06.2022. The relevant part reads as hereunder:
"2. Our clients have been ready and willing to perform their part of contract and have been making repeated demands to you to complete the sale transaction. Even though you had agreed to complete the conveyance of the subject property within 36 months from the date of the agreement with a grace period of six months, you have failed to comply with your obligation. Our clients have already paid an aggregate amount, beyond the agreed sale consideration. Our clients believing your assurance that the conveyance will be completed in due course did not precipitate the matter. Now, though the apartment is
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NC: 2023:KHC:37336 CMP No. 825 of 2022 ready for delivery of possession to our clients, you have withheld the conveyance and delivery of possession based on additional demand of consideration contrary to the agreement. In fact, our clients offered to pay the same but without prejudice to reconcile account and seek refund. Since then Our clients demand is being avoided with ulterior motive. In light of the breach committed by you, dispute has arisen between yourselves and our clients."
This Court must opine that the question of limitation that falls for consideration from this contention will have to be examined in the appropriate proceedings and these circumstances do not render themselves to a ready opinion that the petitioners' right to specific performance stand lapsed on the expiry of 42 months from the date of the agreement.
9. This Court must also observe that this would be especially so with the respondents being embroiled in disputes inter se and the exchange of certain communication between the petitioners and
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NC: 2023:KHC:37336 CMP No. 825 of 2022 the first to sixth respondents [the fifth respondent's Communication] after the orders in the arbitral proceedings permitting the transfer of certain amounts. It is clarified that this Court's view is limited for the purposes of deciding whether the petitioners' claim is ex facie time barred, but this question must be decided in the arbitral proceedings.
10. The seventh and the eighth respondents are unequivocal in their stand that they do not dispute the petitioners' entitlement to specific performance, but they contend that notwithstanding this unequivocal statement they are drawn into litigation exposing them to expenditure and agony that would be unwarranted. In the circumstances of this case, the culmination of the dispute in favour of the petitioners, if there could be one, would be when all the parties to the sale agreement join in the execution of a Deed of Conveyance, and this Court is of the considered view that the interests of justice
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NC: 2023:KHC:37336 CMP No. 825 of 2022 commands that these respondents must also be parties to the proceedings. However, this Court must observe that the seventh and eighth respondents should be at liberty to seek costs that would be admissible in law in the arbitral proceedings.
11. The learned counsels for the parties are heard on who must enter reference of the dispute in the light of the fact that this Court has appointed a common substitute arbitrator for resolution of the dispute inter se the respondents. The learned counsels are categorical that the substituted arbitrator may be appointed as the sole arbitrator but there cannot be a common reference and the learned arbitrator must enter separate reference. In the light of the afore and observing that all the questions except about the existence of the agreement and the arbitrability of the dispute are left open for consideration in the arbitral proceedings, Hon'ble Mr.
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NC: 2023:KHC:37336 CMP No. 825 of 2022 Justice P. Krishna Bhat is appointed as the sole arbitrator.
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 petitioner 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 NV