Telangana High Court
M/S Theme Ambience Constructions P Ltd vs Sajjan Raj Jain on 23 February, 2024
Author: K. Lakshman
Bench: K. Lakshman
1
HONOURABLE SRI JUSTICE K. LAKSHMAN
ARBITRATION APPLICATON No.99 OF 2022
ORDER:
Heard Sri Kishore Rai, learned counsel for the Applicant, Sri Muddu Vijay, learned Senior Counsel representing Aequitas Juris Law Firm, appearing for Respondent Nos. 1 to 4, Sri Podili Hari Prasad, learned counsel appearing for Respondent No.19 and Sri T. Sharath, learned counsel appearing for Respondent No.9. There is no representation on behalf of respondent Nos.5 to 7 and 13 to 18. Despite service of notice, there is no representation on behalf of respondents 8, 10, 11 and 12.
2. This Arbitration Application is filed under Section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 (hereinafter 'the Act') for appointment of arbitrator in terms of Memorandum of Understanding (MOU) dated 31.01.2015 between the Applicant and Respondents. FACTS:
3. The Applicant and Respondents 1 to 8 have entered into said MOU dated 31.03.2015 on the specific terms mentioned therein with 2 regard to sale and development etc, of the Schedule Nos.1 and 2 of the properties mentioned therein and the same are mentioned below:-
SCHEDULED PROPERTY-1 All that land admeasuring Acres 6 in part of Sy.No.102/4/2 of Hakimpet Village, corresponding to T.S.No.1 Part, 3 Part, Block J. Ward 12 and 29 Part, Ward 9, Block J, situated at Road No.12, Banjara Hills, Shaikpet Mandal and Hyderabad, as per the plan annexed and bounded by:-
North: Shaikpet Village boundary, South: Land in Sy.No.102 of Hakimpet Village and Schedule property -2, East: Road leading to MLA Colony, West: Land in Sy.No.102/2 & 3, SCHEDULED PROPERTY -2 All that land admeasuring Acres 2 in part of Sy.No.102/4/2 of Hakimpet Village, corresponding to T.S.No.1 Part, 3 Part, Block J. Ward 12 and 29 part, Ward 9, Block J, situated at Road No.12, Banjara Hills, Shaikpet Mandal and Hyderabad, as per the plan annexed and bounded by:- North: Scheduled Property -1, South: Land in Sy.No.102 of Hakimpet Village and Schedule property -2, East: Road leading to MLA Colony, West: Land in Sy.No.102/4/2, Schedule Property-1. Respondents have entered into the said MOU to settle the disputes, sale and construction of the subject property. The applicant has to invest an amount of Rs.18 Crores. The applicant assured that it will purchase the 3 land admeasuring Ac.2.00 for sale consideration of Rs.30 Crores at the rate of 31,000/- per sq.yard. The agreed sale consideration was to be paid to various third parties, Respondent No.6 and owners to settle the claims as regards schedule property. The Applicant has performed its part of contract by investing huge amount and respondents failed to perform their part of contract. Therefore, disputes arose between the Applicant and Respondents in relation to the said MOU dated 31.01.2015 and the same are required to be resolved through arbitration as per Dispute Resolution Mechanism mentioned in the said MOU. Thus, according to the Applicant, there are disputes between the Applicant and respondents, the same are arbitral disputes. The Applicant has filed the present application to appoint the Arbitrator to adjudicate the disputes between it and Respondents.
4. Respondents 1 to 4, 5, 8 and 19 have filed counters opposing the said application contending that there are inter se disputes between various parties including Applicant and Respondents etc. Even 19th respondent is also having claim. 19th respondent has purchased plot No.4/2 in the land admeasuring Ac.12.02 guntas in Sy.No.102 situated at 4 Hakimpet Village, Taluk, Urban District, Hyderabad under agreement of sale dated 18.04.1975 from Sri Jaten Raj Jain i.e. father of respondents 1 to 4 herein. The said late Jaten Raj Jain, has also executed another agreement of absolute sale dated 30.07.1975 on the specific terms and conditions agreed thereon with regard to the open non-agricultural land in Sy.No.102/4/2 admeasuring Ac.12-02 guntas, situated at Road No.12, Banjara Hills, Hakimpet Village, Urban Taluk, Hyderabad District. It has also mentioned inter se disputes. With the said contentions, 19th respondent has filed an interlocutory application vide I.A.No.2 of 2023 to implead it as 19th respondent. Considering the said facts, vide order dated 09.02.2024, this Court allowed the said application and impleaded it as 19th respondent on the ground that it is also a necessary party for the purpose of adjudicating the issues between the Applicant and Respondent Nos.1 to 18 comprehensively in respect of subject property.
5. 19th respondent has specifically mentioned the details of the inter se disputes i.e. pendency of various proceedings including the following proceedings in CMA No.943 of 2017, CMP No.17386 of 2003 in CCCA No.260 of 2003, judgment and decree in O.S.No.738 of 5 1989, interim order in CCCAMP No.623 of 2007 in CCCA No.231 of 2007 and judgment and decree in O.S.No.235 of 2003 to show that it is also having claim over the subject property.
6. Respondents 1 to 5 have also filed counter almost in the same lines. Even according to them, there are inter se disputes between the Applicant and Respondents and also third parties with regard to subject property. They have also mentioned the pendency of the following proceedings, with regard to subject property:-
1) W.P.No.17781 of 2023 and orders dated 02.01.2024 in the said writ petition,
2) A.A.No.99 of 2022,
3) W.P.No.4324 of 2010 and
4) a copy of G.O.No.249, Revenue (Assn.III) Department, dated 21.02.2009.
7. Respondents 1 to 4 have filed counter almost in the same lines and he has also mentioned about the pendency of W.A.No.1356 of 2001, W.P.No.30103 of 1998. He has disputed that late Sri Jaten Raj Jain, father of respondents 1 to 4 herein never executed agreement of sale in the year 1975 in favour of 19th respondent. Even he has disputed about the execution of the agreement of absolute sale dated 30.06.1975 as 6 claimed by 19th respondent. A report in W.A.No.1356 of 2001 wherein it is stated that signature of the late Sri Jaten Raj Jain was forged. Respondent Nos.7, 8 and 13th have filed W.P.No.30103 of 1998 and this Court has issued certain directions to the government to implement the decision taken in memo dated 11.09.1990 etc.
8. Questioning the said order, W.A.No.1356 of 2001 was filed and the said writ appeal was allowed in part vide order dated 26.02.2009 directing the rival claimants to the property to initiate appropriate proceedings before the competent forum for mutation of their respective names in the town survey and other revenue records. None of the parties to the Writ Appeal proceeded appropriate forum as directed by this Court. Therefore, pending the said inter se disputes among the parties, the applicant herein relying upon the fraudulent document.
9. 5th respondent has filed counter denying the execution of the MOU dated 31.01.2015, Sri V.K.Chandra was never President of 5th respondent. There is no resolution passed while selling the property of the company. The entire Board of Directors were in trouble and the company was in liquidation process. Several cases were pending before 7 NCLT, 2014 in connection with the 2G Scam. The applicant has forged and fabricated MOU dated 31.01.2015 which is not properly stamped. Nearly three crores worth of transactions alleged to have been taken place between the Applicant and some of the respondents not even single bank transaction was shown.
10. The Apex court has appointed a nominee committee to deal and dispose the properties of 5th respondent vide order dated 20.01.2020 in Civil Appeal No.10856 of 2018, to safeguard the interest of 11000 innocent investors. The very execution of MOU dated 31.01.2015 is denied. With the said submissions, 5th respondent sought to dismiss the present application.
11. Respondents 1 to 4 have filed additional counter affidavit and the applicant herein has filed rejoinder to the same.
12. It is relevant to note that applicant herein has filed a memo vide USR No.68430, dated 25.07.2023 stating that a moratorium has been declared on 5th respondent by the Apex Court vide orders dated 20.01.2020 in Civil Appeal No.10856 of 2016 filed by Bhupendra Singh. In the light of the said moratorium, the applicant shall not pursue any 8 legal action against 5th respondent for time being i.e. during moratorium period while deciding present applicant against all other respondents other than 5th respondent. Once moratorium is lifted by the Apex Court, the applicant shall pursue the available legal remedies including the arbitration clause against the 5th respondent. With the said submissions, 5th respondent sought permission of this Court to withdraw the present arbitration application against the respondent No.5 and pursuing the present Arbitration Application against the other respondents other than 5th respondent. It has also filed a copy of the said orders passed by the Apex Court. In the light of the aforesaid orders and moratorium imposed by the Apex Court on 5th respondent, permission sought by the petitioner vide the aforesaid memo to withdraw the proceedings against 5th respondent is permitted. Therefore, the present application is dismissed against 5th respondent on the said ground alone.
13. Sri Kishore Rai, learned senior counsel representing Ms. Divya Roi Sohini, learned counsel for the Applicant, would submit that it has no grievance against 5th respondent in the present application and there are disputes between the applicant and other respondents. Respondents 1 to 4 9 herein are even selling the subject property to third parties and granting third party interest. Despite interim orders in the application filed by the petitioner under Section 9 of Arbitration Act, the respondent has been continuing with the alienations. Though there is an order passed by this Court in W.P.No.17781 of 2023 dated 07.07.2023, Sub Registrar concerned, is entertaining the registrations. In which event, there would be third party interest. He would submit that there are disputes between the Applicant and other respondents other than 5th respondent and the allegations of forgery, deficiency of stamp duty etc. will be considered by the arbitrator himself. He submits that the Apex Court permitted that all the projects taken up by the 5th respondent may go on. With the said submissions he sought to allow the present application.
14. Whereas, Sri Sri Muddu Vijay, learned Senior Counsel representing Aequitas Juris Law Firm, appearing for Respondent Nos. 1 to 4, would contend that there are inter se disputes between the Applicant and respondents and also third parties with regard to subject property and the same cannot be adjudicated by the arbitrator to be 10 appointed by this Court in the absence of 5th respondent, There is moratorium imposed against the 5th respondent.
15. The aforesaid facts would reveal that the entire gamet of the issue is with regard to Schedule Nos.1 and 2 of the properties. The aforesaid MOU dated 31.01.2015 was entered by the Applicant and Respondents 1 to 18. The arbitration clause mentioned in MOU, dated 31.01.2015 is as follows:-
DISUPTE RESOLUTION All differences and disputes between the parties arising out of or in connection with this MOU shall be referred to arbitration as per the provisions of the Arbitration and Conciliation Act, 1996. The arbitral tribunal shall comprise of a sole arbitrator who shall be a retired High Court Judge, the award shall be passed within six (6) months from the date of first meeting called by the arbitrator. The arbitration proceedings shall be conducted at Hyderabad, Andhra Pradesh.
The said MOU is specifically entered by and between the Applicant and other Respondents and there are many obligations casted on 5th respondent to perform. The Apex Court has imposed moratorium on 5th respondent vide the aforesaid order. The said fact is not disputed by Sri Kishore Rai, learned counsel representing Ms. Divya Roi Sohini, learned counsel for the Applicant. Considering the memo filed by the Applicant 11 herein, this Court permitted the petitioner to withdraw the present application against 5th respondent. Therefore, 5th respondent cannot be a party to the arbitrator appointed by this Court in the present application.
16. As discussed supra, vide MOU dated 31.01.2015, there are many obligations to be performed by 5th respondent and the present applicant is dismissed against 5th respondent as withdrawn. As discussed supra, admittedly there are serious inter se disputes between the Applicant, Respondents and third parties with regard to subject property.
17. There are interim orders passed by this Court and Civil Court.
The title of the subject property itself is in dispute. The said aspects cannot be considered by the Arbitrator appointed by this Court in the present application.
18. It is relevant to note that with regard to contention of 5th respondent that it has not executed the MOU dated 31.01.2015 and that the said MOU is not properly stamped can be considered by the arbitrator himself as held by the Apex Court in N.N. Global Mercantile Private 12 Limited vs. Indo Unique Flame Ltd 1. The present application is dismissed against the 5th respondent as withdrawn. Thus, there are serious inter se disputes between the Applicant and Respondents including 5th respondent and third parties. Even 19th respondent is also claiming right over the subject property. However, Sections 5 and 6(A) of the Act says that the Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub- section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. But in the present case, the MOU dated 31.01.2015 is between the Applicant and Respondents 1 to 18 including 5th respondent. The present application is dismissed against 5th respondent as withdrawn. Moratorium was imposed on 5th respondent. Many obligations are casted upon 5th respondent. It has to perform the said obligations. Therefore, in the absence of 5th respondent, Arbitrator to be appointed by this Court cannot be in a position to adjudicate the disputes between the Applicant and Respondents.
1 2023 SCC Online SC 495 13
19. In view of the pendency of the aforesaid inter se disputes, in the absence of 5th respondent. Arbitrator cannot adjudicate and pass an award with regard to the subject property. If the applicant is having any grievance with regard to sale of subject property by respondents 1 to 4 in violation of order passed by this Court in the aforesaid Writ Petition and Arbitration Application, its remedy is elsewhere, it cannot file the present application and seek appointment of arbitrator in the absence of 5th respondent.
20. Viewed from any angle, this application is liable to be dismissed and accordingly dismissed.
Consequently, miscellaneous petitions, if any, pending in this Arbitration Application shall stand closed.
_________________________ JUSTICE K. LAKSHMAN Date:23.02.2024 VVR.