Telangana High Court
Smt. M. Hemalatha Devi, vs B.Udayasri on 19 May, 2022
Author: A. Abhishek Reddy
Bench: A. Abhishek Reddy
THE HON'BLE SRI JUSTICE A. ABHISHEK REDDY
ARBITRATION APPLICATION No.97 OF 2020
ORDER:
This application is filed under Section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act'), seeking appointment of an Arbitrator in terms of the Agreement of Sale dated 27.08.2013.
It is the case of the applicants that they entered into Agreement of Sale vide document No.5860 of 2013 dated 27.08.2013 in respect of Plot No.278, admeasuring 357 Square Yards together with constructed area admeasuring 4000 Square Feet comprised in the layout named "The Legend Chimes Extension" situated at Kokapet Village, Rajendranagar Mandal, Ranga Reddy District, for a total sale consideration of Rs.49,42,000/-. That as per Clause 14.1 of the Agreement of Sale dated 27.08.2013, the respondent is bound to enter into a Construction Agreement. But, the respondent failed to enter into Construction Agreement. That pursuant to the notice dated 19.02.2020 and the reminder notice dated 06.03.2020 issued by the applicants calling upon the respondent to execute and register the cancellation deed, the respondent has issued a reply dated 09.03.2020 with all false and frivolous contentions. As the respondent did not come forward for execution of the deed of cancellation of Agreement of Sale dated 27.08.2013, the applicants have addressed a letter dated 11.11.2020 to the respondent invoking Clause No.23 of the Agreement of Sale dated 2 27.08.2013 and nominating a retired Judge of this Court as an Arbitrator.
Since the respondent did not respond to the said letter and the negotiations failed, the applicants have filed the present Application.
The respondent has filed a counter admitting about her entering into Agreement of Sale dated 27.08.2013 to buy independent house/villa in "The Legend Chimes Extension" to be constructed in the subject plot. It is stated that she has paid an amount of Rs.4,94,200/- towards advance and the balance sale consideration of Rs.44,47,800/- is payable at the time of registration of the sale deed. That pursuant to the demand made by the applicant No.3, her mother-in-law has paid an amount of Rs.45,00,000/- on her behalf. Though the applicant No.3 has commenced the construction, it has abruptly stopped the construction. The respondent has denied the receipt of the notice dated 19.02.2020. It is stated that the alleged termination notice dated 06.03.2020 is invalid and the applicant No.3 does not have any right to cancel the agreement of sale dated 27.08.2013, as it was not only executed by the applicant No.3 but also by the applicant Nos.1 and 2. That the respondent has already approached the District Consumer Disputes Redressal Forum, Hyderabad, by filing C.C.No.440 of 2021. It is further stated that the applicants, having received an amount of Rs.45,00,000/- towards cost of construction and duly certified that all the dues are cleared, are estopped from alleging that the construction agreement was not made.
The applicants have filed a reply affidavit stating that the averments made by the respondent in the counter affidavit are false and untenable 3 and that the respondent has not paid the amount of Rs.45,00,000/- towards construction of villa as alleged by her. It is further stated that the respondent has filed the Consumer Complaint being C.C.No.443 of 2021 before the District Consumer Disputes Redressal Forum, Hyderabad, only after filing of the present Arbitration Application.
Heard the learned counsel for the applicants and the learned counsel for the respondent. Perused the record.
A perusal of the Agreement of Sale dated 27.06.2013 discloses that Clause 23.2 thereof contains the arbitration clause, which reads as follows:-
"23.2 Arbitral Tribunal and Conduct of Proceedings:- If the parties are unable to settle the Disputes by negotiation within 30 (thirty) days from the date on which negotiations are initiated, the Disputes shall be referred to and finally resolved by arbitration under the Arbitration and Conciliation Act, 1996. In this regard, the Parties irrevocably agree that:
23.2.1. Constitution of Arbitration Tribunal: The arbitration tribunal shall consist of the following 3 (three) arbitrators, each of whom shall be an Advocate:
(a) Developer's Appointee : 1 (one) arbitrator to be appointed by the Developer.
(b) Purchaser's Appointee: 1 (one) arbitrator to be appointed by the Purchaser.
(c) Chairman: The Chairman of the arbitration tribunal, to be jointly appointed by the other 2 (two) arbitrators appointed as above. The Chairman of the arbitration tribunal shall be a retired High Court Judge of any High Court of India.
23.2.2. Place: The place of arbitration shall be Hyderabad only.
23.2.3. Language: The language of the arbitration shall be English.
23.2.4. Binding Effects: The arbitration tribunal shall be entitled to give interim awards/directions regarding the 4 Disputes and shall further be entitled to avoid all the rules relating to procedure and evidence as are expressly avoidable under the law. The arbitration shall otherwise be carried out in terms of and in accordance with the Arbitration and Conciliation Act, 1996, with modifications made from time to time and the provisions of the said Act shall apply to the arbitration proceedings. The interim/final award of the arbitration tribunal shall be binding on the Parties."
Even though both the learned counsel have argued at length on the maintainability or otherwise of the present Arbitration Application seeking to appoint an Arbitrator for resolving the dispute between the parties as per the terms and conditions of the agreement of sale, which contains an arbitration clause. Having regard to the fact that the respondent has already filed C.C.No.440 of 2021 before the District Consumer Disputes Redressal Forum, Hyderabad, and the respondent has received the notice in the said C.C. This Court is deliberately not entering into the merits or demerits of the case, as this Court is of the prima facie opinion that the appropriate remedy for the petitioner is to file an application under Section 8 of the Act, and any comments made by this Court would seriously prejudice the District Consumer Disputes Redressal Forum, Hyderabad. The provisions of Section 8 of the Act, which reads as under:-
"Power to refer parties to arbitration where there is an arbitration agreement - (1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first 5 statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanies by the original arbitration agreement or a duly certified copy thereof:
Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-
section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
Having regard to the above, this Court deems it appropriate to relegate the petitioners to file an application under Section 8 of the Act before the District Consumer Disputes Redressal Forum, Hyderabad.
In the result, the Arbitration Application is disposed of with a liberty to the petitioners to file an application under Section 8 of the Act before the District Consumer Disputes Redressal Forum, Hyderabad, within a period of two (2) weeks from the date of receipt of a copy of this order and 6 on such application being filed, the District Consumer Disputes Redressal Forum, Hyderabad, shall pass necessary orders strictly on merits duly putting all the parties on notice. The District Consumer Disputes Redressal Forum, Hyderabad, shall endeavour to complete this entire exercise, as expeditiously as possible, preferably within a period of six weeks from the date of filing of the application by the petitioners.
Miscellaneous Applications, if any, pending in the Arbitration Application, shall stand closed. No order as to costs.
______________________ A. ABHISHEK REDDY, J Date: 19.05.2022 va