Bangalore District Court
M/S Fortuna Constructions India Pvt Ltd vs Shamalamma on 30 January, 2024
IN THE COURT OF LXXXIX ADDL.CITY CIVIL &
SESSIONS JUDGE, BENGALURU. (CCH-90)
Present: Sri.S.J.Krishna, B.Sc., LL.B.,
LXXXIX Addl.City Civil &
Sessions Judge, Bengaluru.
Dated: 30th JANUARY 2024
Com.A.P.No.98/2023
Petitioner/ M/s.Fortuna Constructions (India) Pvt.,
PLAINTIFF : Ltd.,
Having its Office at No.184,
Fortuna House, Outer Ring Road,
Opp.NCERT, BSK 3rd Stage,
Banashankari, Bengaluru-560 085,
Represented by its
Managing Director,
Mr.Padmaiah Vuppu.
(By M/s.B.M.Associates, Advocates)
V/s.
Respondents/ 01. Smt.Shamalamma,
DEFENDANTS : W/o Late A.N.Krishna Murthy,
Aged about 77 Years,
02. Sri.K.Nataraj,
S/o Late A.N.Krishna Murthy,
Aged about 54 years,
03. Master N.Akhilesh,
S/o K.Nataraj,
Aged about 18 years,
04. Master N.Anil,
S/o K.Nataraj,
Aged about 15 years,
Minor represented by his
father and natural guardian,
Mr.K.Nataraj.
/2/
Com.A.P.No.98/2023
05. Sri.K.Gopala Gowda,
S/o Late A.N.Krishna Murthy,
Aged about 44 years,
Since deceased by his LR's
5(a) Smt.Kavitha.G,
W/o Late K.Gopala Gowda,
Aged about 38 years.
5(b).Master Aryan.A.G,
S/o Late K.Gopala Gowda,
Aged about 3 years,
06. Master Ashwin.G.A,
S/o K.Gopala Gowda,
Aged about 13 years,
Minor represented by his
Mother and Natural Guardian,
Smt.Kavitha.G,
07. Smt.Jayalakshmamma,
D/o Late A.N.Krishna Murthy,
Aged about 57 years.
08. Smt.Ammajamma,
D/o Late A.N.Krishna Murthy,
Aged about 57 years,
09. Smt.Hemalatha,
D/o Late A.N.Krishna Murthy,
Aged about 49 years,
All are R/at
Avalahalli Village,
Singanayakanahalli Post,
Yelahanka Hobli,
Bengaluru North Taluka,
Bengaluru District-560 064.
(By Sri.T.M.Venkatareddy, Advocate)
Date of Institution of suit : 05.08.2023
Nature of suit : U/Sec.34 of the Arbitration and
(suit on pronote, suit for Conciliation Act,1996
declaration and
possession suit for
/3/
Com.A.P.No.98/2023
injunction, etc.,)
Date of commencement : -
of recording of evidence
Date of judgment : 30.01.2024
Total duration : Year/s Month/s Day/s
00 03 25
(S.J.KRISHNA)
LXXXIX ADDL.CITY CIVIL &
SESSIONS JUDGE, BENGALURU.
(CCH-90)
JUDGMENT
The Plaintiffs in Com.A.P.No:128/2023 have filed a petition under Section 34 of Arbitration & Conciliation Act, 1996 praying the Court
a) Call the records of the proceeding in A.C.No.178/2021;
b) To set-aside the Award dated 12.06.2023 passed by the Learned Sole Arbitrator in A.C.No.178/2021 only in so for as by allowing the counter claim, that the claimants shall pay of ₹.65,00,000/- to the respondents within a period of 3 months from the date of award and failing which, the respondent is at liberty to recover the same in accordance with law;
c) To allow the claim statement made by the petitioners/claimants in A.C.No.178/2021;
d) Pass such other orders or grant such other reliefs as may be deemed fit and proper in the fact and circumstances /4/ Com.A.P.No.98/2023 of the case along with costs of litigation, in the interest of justice and equity.
02. The Plaintiff in Com.A.P.No:98/2023 has filed a petition under Section 34 of Arbitration & Conciliation Act, 1996 praying the Court
a) Call the records of the proceeding in A.C.No.178/2021 and set-aside the Award dated 12.06.2023 passed by the Learned Sole Arbitrator in A.C.No.178/2021 in its entirety and remand the matter back to the Hon'ble Arbitrator for fresh consideration;
b) To allow the Counter Claims made by the Plaintiff herein in A.C.No:178/2021;
c) Pass such other orders or grant such other reliefs as may be deemed fit and proper in the facts and circumstances of the case.
03. Smt.Shamalamma and others, who are the plaintiffs in Com.A.P.No:128/2023 had filed CMP No:134/2020 before the Hon'ble High Court of Karnataka, Bengaluru seeking appointment of Arbitrator against the Respondent in CMP No.134/2020. The Hon'ble High Court was pleased to appoint Shri Veeranna G.Tigadi, District Judge (Retd.,) as Sole Arbitrator vide order dated:15.01.2021.
04. For the sake of convenience the parties to the Section 34 Proceeding/s are referred to in the same rank as before the learned Arbitral Tribunal i.e. Smt.Shamallamma /5/ Com.A.P.No.98/2023 and others are referred to as "Claimants"; M/S.FORTUNA CONSTRUCTIONS (India) Pvt., Ltd., as 'Respondent".
The Summary of the case of the CLAIMANTS before the Learned Arbitral Tribunal in A.C.No.178/2021 is as under:
05. The Claimants are the absolute owners of the property bearing Sy. No. 118, new Sy. No. 118/1, measuring 1 Acre, situated at Avalahalli Village, Singanayakanahalli post, Yelahanka Hobli, Bangalore North Taluka, Bangalore District. The land has been duly converted from agricultural use to non-agricultural residential purpose from the Deputy Commissioner, Bangalore hereinafter called as the "Schedule Property".
06. The Respondent No. 1 is a Public Limited Company, represented by its Managing Director Mr.PADMAIAH VUPPU (Respondent No. 2.)
07. The Claimants and the Respondent entered in to a registered JDA dated:26.05.2014 to develop and to build the apartments (flats) in the Schedule Property and incorporated the terms and conditions therein.
08. As per the terms of JDA dated: 26/05/2014, the Respondent had agreed to obtain the approved plan to build apartments (flats) as required under law within a period of 3 months from the date of JDA and to commence the /6/ Com.A.P.No.98/2023 construction worth within 3 months there from. The Project was to be completed within a period of 33 months, along with grace period of 6 months. The stipulated time for completion of the project was expired in the month of February 2017. The Respondent had agreed to hand over the possession of apartments, of flats along with undivided share of 34% immediately after completing the constructions to the Claimants on or before February 2017. Wherein "time is the essence" of contract".
09. It was agreed by the parties that the Claimants and the Respondent shall have undivided share at the ratio of 34% for the Claimants and 66% for the Respondent. The Respondent has failed to obtain the approved plan from the competent authority and failed to start and complete the project within the agreed time line. It was also agreed upon by the parties that in the event of Respondent's failure to complete the project within the stipulated period, the respondent is liable to pay rent at the rate of ₹. 2/- per sq. Ft. Per-month for the entire 34% undivided share in the apartments. The Respondent has paid only a sum of ₹.2,00,000/- as refundable advance amount. The respondent has not paid any Good will and Advance amount to the Claimant. The Schedule Property still remains vacant.
10. The Respondent failed to perform its obligations under JDA. Hence the Claimants issued a legal notice and letters dated 26.03.2018 calling upon the Respondent to /7/ Com.A.P.No.98/2023 comply with the conditions stipulated in the JDA and consequently to cancel the same. The notices were served on the Respondent. The Respondent neither replied the notice nor complied with the notice demand though the Claimants were ready and willing to perform their part of contract as per JDA. Hence, the Claimants have sustained huge loss more than Crores of money for the last 7 years.
11. The Claimants are the members of joint family. The schedule property was an agricultural land and was converted for non agricultural purpose on 27.03.2014. The Claimants are depending upon the schedule property. The said JDA was executed by the Claimants for their benefits and to earn their livelihood.
12. On account of the non performance of its obligations under JDA by the Respondent, the the Claimants have suffered heavy loss for more than ₹.One Crore for the past 7 years. The Respondent has failed to pay the rent on every month. The Claimant again issued legal notice on 23.07.2020 calling upon the Respondent to comply with conditions stipulated in JDA and to pay the damages and return the original title documents. The said notices were returned as the office was shifted. Claimants again issued notices on 07.08.2020 for the present address, said notices were also returned with the shara "Door Locked" at the time of service of notice and on other day as "Addressee not found" at the time of service.
/8/ Com.A.P.No.98/2023
13. The Claimants have learnt that the Respondent has collected Crores of rupees, by showcasing the Schedule Property is meant for construction of residential apartments. The Respondent has stopped putting up construction. The Claimants called on the Respondent over cell phone and the cell phone was always switched off. The Claimant went to the office of the Respondent. His office remains closed always and he was not available for any communications and Respondent remained absent on all the occasions and it has created doubt about the intention of the Respondent. The Claimants apprehends that the respondent may collect Crores of rupees and disappear from the place. The Respondent has no intention to complete the construction of residential apartments. It appears that, the Respondent has no funds to construct the apartments. The Claimants have been put to heavy loss and substantial injury on account of non compliance of obligations under JDA by the Respondent.
14. Though the Claimants are ready and willing to perform their part of obligation as per the terms and conditions of the Joint Development Agreement and Respondent is not able to do any of the work. That in spite of granting sufficient time, the Respondent is not performing his part of obligations, The Respondent has not taken any initiative in the matter and thereby caused heavy loss to Claimants for the last 7 years.
/9/ Com.A.P.No.98/2023
16. As per clause No.26 of the JDA it is mutually agreed that the developer/second party/Respondent shall complete the construction in all respect fit for human habitation and shall complete the construction within stipulated period of forty-five (45) months from the date of the sanctioned plan and that is to be completed as on February 2017. The Respondent has not even obtained sanctioned plan and license from the competent authority in order to put up construction of the residential apartments in the Schedule Property and even did not initiate any proceedings. The Respondent, after satisfying the documents pertaining to the Schedule Property, has come forward to JDA.
17. The Respondent is making attempts to create third party rights in respect of the Schedule Property, in spite of having entered into JDA with the Claimants and the property which stands in the name of Claimants. The Respondent without constructing the residential apartments trying to create third party interest in the property, it leads to multiplicity of proceeding and the Claimants will be put to irreparable loss and Substantial injury, if the Respondent collects money from the Prospective purchasers without starting and completing the construction work.
18. By violating the terms and conditions of the JDA and contrary to said terms and conditions, the Respondent is making alleged transactions without the knowledge of Claimants. The JDA provides that in the event of their being /10/ Com.A.P.No.98/2023 any dispute parties to agreement, the same shall be referred to Arbitrator and the award passed by the Arbitrator shall be binding on both the parties.
19. The market value of the Schedule Property is of ₹.4,13,82,000/- (Four Crores thirteen lakhs eighty two thousand only).
20. The Claimants have prayed the Arbitral Tribunal to grant the following reliefs:
a) Declare that the Joint Development Agreement dated 26/05/2014 in No. GNR-1-00597/2014-15, stored in Book No. 1, CD No.GNRD91, registered in the office of Senior Sub-
Registrar, Ganganagar (Gandhi Nagara), Bangalore is invalid and cancelled and to pass award, and consequently permit the Claimants to develop the Schedule Property at their will and nil encumbrances.
b) Grant injunction against the Respondents, restraining the Respondents from interfering, alienating or encumbering or creating any charge on the Schedule Property in favor of any third party either in part or in the form of flats.
c) Direct the Respondents to return the original title documents of the schedule Property including original JDA dated: 26.05.2014 to the Claimants.
d) Grant such other relief's as this Hon'ble court may deem fit in the facts and circumstances of the case along with costs of the litigation.
/11/ Com.A.P.No.98/2023 The Respondent has filed Statement of Objections along with Counter Claim as under:
21. The Claim Petition of the Claimants is not maintainable in law and facts of this case and the same is liable to be dismissed. The Claimants have not approached this Authority with clean hands and have filed this Claim Petition by suppressing several vital and material facts, with a sole intention to harass the Respondent. The Claimants have failed to make out a case for the prayers sought in the Claim Petition and they are not entitled to any reliefs as sought and the Claim Petition is liable to be rejected, with costs.
22. The Claim Petition is also bad for mis joinder of parties and hence the Claim Petition is liable to be dismissed. The Claim Petition is also barred by Limitation and on this ground also the same is liable to be dismissed.
23. The allegations made in the Claim Petition that, Claimants filed C.M.P. U/S 11 (6) (a) of the Arbitration and Conciliation Act 1996, praying to appoint an Arbitrator to resolve the existing dispute between the parties herein in terms of the Arbitration Clause contained in the Joint Development agreement dated 26.05.2014 in C.M.P. 134/2020 and after hearing, the Hon'ble High Court of Karnataka, Bengaluru allowed the Petition on 15.01.2021 and appointed the sole Arbitrator to Arbitrate over the /12/ Com.A.P.No.98/2023 dispute and conduct Arbitration proceedings at Arbitration Centre in Karnataka (Domestic and International) Rules 2012 are all not well within the knowledge of these Respondents and they have come to know about the same, only through this Claim Petition.
24. The averments made in the Claim petition that the land Bearing Sy. No. 118, new Sy. No. 118/1, measuring 1 acre situated at Avalahalli Village, Yelahanka Hobli, Bangalore North Tq. and the said lands were converted from agricultural to non-agricultural residential purpose from the D.C., vide Conversion Order No. ALN (NAY) SR: 233/2013-14 dt: 27.03.2014 are all hereby admitted as true and correct. Before the conversion of the lands and before entering into registered JOINT DEVELOPMENT AGREEMENT, during the life time of Sri. A. N. Krishnamurthy, he along with 2nd and 5th Claimant executed a Memorandum of Understanding with the Respondent i.e. on 04.03.2013 agreeing to certain terms and conditions and under the said MOU the First Respondent herein had agreed to pay a sum of ₹. 60,00,036/- (Rupees Sixty Lakhs thirty six only) as "GOOD WILL" and on 04.03.2013 the First Respondent has paid an advance "Good Will" of ₹.50,00,027/- (Rupees Fifty Lakhs twenty seven only) as detailed below to the said Sri. A. N. Krishnamurthy, 2 nd and 5th Claimants namely to Mr. K. Nataraj and Mr. K. Gopal Gowda respectively:
/13/ Com.A.P.No.98/2023
a) A sum of ₹. 10,00,009/- (Rupees Ten Lakhs nine only), by D.D. No. 000905 dt: 04.03.13 drawn on HDFC Bank Ltd., Kasturba Road, Bangalore, to Mr. A. N. Krishnamurthy.
b) A sum of ₹. 20,00,009/- (Rupees Twenty Lakhs nine only), by DD. No. 000903 dt: 04.03.13 drawn on HDFC Bank Ltd., Road, Bangalore, to Mr. K. Nataraj.
c) A sum of ₹.20,00,009/- by DD.No.000904 dt:
04.03.13 drawn on HDFC Bank Ltd., Kasturba Road, Bangalore, to Mr. K. Gopal Gowda.
25. Subsequently as agreed, the First Respondent has paid the balance amount of ₹. 10,00,009/- (Rupees Ten Lakhs nine jointly to the Claimants by Cash on 26.05.2014 i.e. at the time of execution and registration of JOINT DEVELOPMENT AGREEMENT Only upon receipt of the entire agreed Good Will amount, the Claimants have executed and registered the JOINT DEVELOPMENT AGREEMENT. Apart from the above the First Respondent has also paid a sum of ₹.2,00,000/- (Rupees Two Lakhs only) as refundable Security deposit by way of RTGS transfer to the Claimants i.e. at the time of execution and registration of JOINT DEVELOPMENT AGREEMENT. Even though the Claimants have received the above said amounts, they have very conveniently suppressed the above said payments with an ulterior motive. Upon receipt of the above "Good Will" amount from the First Respondent, the Claimants by using the said amount got converted the lands to residential purpose from the D.C. and also got re-conveyed the lands form one Mr. /14/ Com.A.P.No.98/2023 Syed Rasheed i.e. by paying a sum of ₹. 35 Lakhs to him as settled in suit O.S. No. 438/2008.
26. The allegations made in the Claim Petition that, Respondent No. 1 is a Public Limited Company is hereby denied as false, but it is Private limited Company and it is duly represented by its Managing Director i.e. 2 nd Respondent herein. The Respondent Company is a separate legal entity and it may be represented by 2 nd Respondent, hence the allegations that Respondent No. 1 and Respondent No. 2 are both one and the same, is hereby denied as false and further the Claim Petition as against 2 nd Respondent in his individual capacity is not maintainable.
The Respondent, admit the further averments that the First Respondent and the Claimants have entered into a registered JDA dt: 26.05.2014. On the date of registration of the said JOINT DEVELOPMENT AGREEMENT, the First Respondent has spent huge considerable amount i.e. for the Stamp duty, registration & miscellaneous expenses and also on the above project.
27. The First Respondent agreed to build the Flats over the Schedule converted lands, after obtaining sanctioned Plan and obtaining necessary NOC's and Permissions from the competent authority. Immediately after entering into the JOINT DEVELOPMENT AGREEMENT, the First Respondent started the work and accordingly initially applied to Katha Transfer i.e. to Singanayakanahalli V.P. and by spending /15/ Com.A.P.No.98/2023 huge amount and got transferred the Katha of the said lands and in that connection on 23.09.2014, the First Respondent officially paid a sum of ₹. 96,916/- towards property tax, License fees etc. to the said V.P. and apart from the above, it has also spent huge amount, for the same. It is further contended that the First Respondent has undertaken the following works to get the Plan sanctioned from the Competent Authority and due to the Orders of NGT (National Green Tribunal) and due to the illegal acts of Claimants the further process was delayed and for the said process it has spent huge amount both Officially and un- officially;
a) Got transferred the Khata of the said lands on 23- 09-2014.
b) Got obtained NOC from Panchayath for water supply on 14-01-2015;
c) Applied for the Plan sanction on 27-03-2015 to B.D.A;
d) Applied for NOC on 20-07-2015 to Fire Department;
e) Applied for NOC on 24-09-2015 to K.S.P.C. Board.
f) Plan approval Fee was paid to B.D.A. on 21-09-2015 vide Challan.
28. On the application of First Respondent for Plan approval, initially on 20.10.2015, B.D.A. has permitted to develop only 5,058.53 Sq. meters with a condition to leave the lands for Buffer Zone. The allegations made by the Claimants that, the Respondents have not the processed to /16/ Com.A.P.No.98/2023 obtain the approved Plan from the competent authority and failed to start and complete the construction within the stipulated period as on February 2017 and as such the Respondents are liable to pay ₹. 2/- per Sq. Ft. per month for the entire 34% of undivided share in the apartments and further the Respondents have not paid any Good Will and Advance amount, but only paid meager amount of ₹.2,00,000/- towards returnable advance amount are all denied as false and the Claimants are put to strict proof of the same. As stated above, the First Respondent has paid in all a sum of ₹. 60,00,036/- (Rupees Sixty Lakhs thirty six only) as 'GOOD WILL".
29. The Claimants have issued a Legal notice dt:
26.03.18 to the First Respondent, through their Advocate Mr. H. Anjana Murthy admitted as true and on receipt of the said Legal Notice, the First Respondent has sent a suitable reply on 03.04.2018, through its Advocate. Since the First Respondent has paid a sum of ₹.60,00,036/- to the Claimants and spent nearly a sum of ₹. 40 Lakhs on the project, in the said reply, it was stated that it has paid a sum of ₹. 1 Crore. Further in the said reply, the First Respondent has clearly explained the cause for the delay i.e. new Order of the NGT and for the said new Order, the BDA has kept the plan pending and the First Respondent made its sincere attempts to get the approval from BDA and due to the Nala issue i.e. Buffer Zone issue the Plan sanction was kept pending. As per the new Order of the /17/ Com.A.P.No.98/2023 NGT, the Respondents were supposed to leave a set back around 30 meters towards Nala side as Buffer Zone and if the said 50 meters was left as a setback, the area left for the development will be very less and the builders and Owners entitlement will also be very less and as such the First Respondent was making its best efforts to save the said area and but because of that, all other conditions were fulfilled for Plan sanction and to start the construction Work in the said reply the First Respondent has clearly called upon the Claimants to wait till the Buffer zone issue is resolved.
30. The contention of the Claimants that due to failure of performing the contract, violated the terms and conditions of JOINT DEVELOPMENT AGREEMENT and acted contrary to the powers and rights of vested in aforesaid property, the Claimants had been put to greater hardship, substantial injury and suffered heavy loss more than ₹. 1 Crore, even the Claimants were requesting and demanding rent on every month now and then from the date of executing JDA and to perform the contract and the Respondents postponed by one pretext or the other even though a letter dated 26.03.18 was issued are all denied as false and the Claimants are put to strict proof of the same.
31. Due to COVID-19 pandemic situation during the period of June 2020 to August 2020, it was not functioning regularly and it has also shifted its Office from HAL 2nd Stage /18/ Com.A.P.No.98/2023 and as such the alleged Legal notice dt: 23.07.20 & 07.08.20 were not served on the Respondents and as such, the same could not be countered. Even though the Claimants have received the reply dt: 03.04.18 to the earlier notice dt: 26.03.18, very strangely, issued subsequent notices dt: 23.07.20 & 07.08.20 and in the said notice, the Claimants have not denied the contents of reply notice, but on the other hand without denying the contents of the reply notice, reiterated the allegations made in the earlier notice. Nowhere in the said subsequent notices, the Claimants have either permitted the First Respondent to leave 50 meters set back as per the new NGT orders and to proceed with the constructions nor denied the receipt of Good Will amount, but without doing so have repeated the old allegations. After entering into JDA the First Respondent has invested huge amount on procuring Khata, NOC's and for submission of Plan for approval, architect fees of administration expenses, out of pocket expenses and miscellaneous expenses etc. with an intention to complete the project and the same is delayed but for the NGT new orders.
32. It is denied that the Respondent has collected Crores of rupees by showing the Schedule Property, for the purpose of construction of residential apartments and Respondents have stopped putting constructions and Claimants have on several occasions called the Respondent over Cell phone and always his cell phone was switched off and Claimants went to the office of the Respondent and the /19/ Com.A.P.No.98/2023 office remained closed and he was not available for any communications and that Respondent remained absent on all the occasions and it created doubt about the Respondents and that the respondent may collect Crores of amount and that Respondent has disappeared from place and that he has no intention to complete the construction of residential apartments and it appeared that, he has no funds to construct the same and under the said circumstances, the Claimants have been put to heavy loss and substantial injury due to breach of conditions of JDA by respondent are all self-serving and imaginary and far away from truth. The Respondent has not collected any money from any one or any institution by showing the Schedule Property, but on the other hand First Respondent has invested huge amount on the project as stated above and the Respondent has not raised/mobilized any funds either from any institution or from any persons on Schedule Property. The allegations that the Respondent has closed office and that they have not responded are all false, but on the other hand they never turned up to office, since most of the times the Claimants were very busy in lodging Police complaints and harassing the Respondents.
33. The First Respondent Company was very much in operation and very recently it has shifted its Office and the Respondent have not received any phone calls from the Claimants.
/20/ Com.A.P.No.98/2023
34. The contentions of the Claimants that though the Claimants are ready and willing to perform their part of obligation as per the terms and conditions of the JOINT DEVELOPMENT AGREEMENT dated 26.05.2014 and Respondent is not able to do any of the work and that in spite of granting sufficient time, the Respondent is not performing their part of obligation and Respondent has not taken any initiative or action in the matter and thereby caused heavy loss to Claimants for the last 7 years are denied as false and the Claimants are put to strict proof of the same. The First Respondent is ready and willing to perform its part of the contract, but the Claimants are not allowing it to perform its part of contract and the Claimants have made false police complaints and harassing the Respondents and so also the Claimants have written to B.D.A. and objected for the Plan sanction and further when the B.D.A. officials visited the spot for survey, the Claimants have not allowed them to carry out survey for Plan sanction. The First Respondent has made tremendous efforts for the Plant sanction, but for the new NGT orders and as the Claimants have objected for the Plan sanction and survey, the First Respondent could not proceed further. With the help of local influential peoples, the Claimants used to lodge several false complaints and use to summon the 2 nd Respondent very frequently to Police station and used to compel 2nd Respondent to stay in the station from morning till evening and not happy with the same, the Claimants have now approached this Hon'ble Arbitrator for /21/ Com.A.P.No.98/2023 cancellation of the JDA and for other reliefs, by making false allegations and grounds.
35. The averments made in the Claim Petition are partially true that as per JDA dated 26.05.14, the First Respondent has agreed to complete the construction within 45 months from the date of the Sanctioned Plan and further agreed to complete the same as on February 2017, but the allegations that the Respondent has not even obtained sanction Plan and license from the competent authority in order to put up construction of the apartments in the Schedule Property even did not initiate any proceedings are all denied as false and the Claimants are put to strict proof of the same. Initially, the First Respondent applied for the Plan sanction as on 21.09.15 itself, but due to new NGT orders, the same was pending and the construction work could not be started and completed. and the same is not due to the fault of First Respondent and it is due to Government restrictions and on this aspect both the parties have clearly agreed in the JOINT DEVELOPMENT AGREEMENT dt: 26.05.14 at clause No. 11 as follows : "The Second party/Developer shall commence construction within Three Months after obtaining plan approval. However, the Second party/ Developer shall not incur any liability for any delay in delivery of the Possession of the First party/owners constructed are, by reason of non-availability of cement and/or steel, lorry Strike, Bandh, non-availability of building materials and/or by Government Restrictions and/or by /22/ Com.A.P.No.98/2023 reason of Civil Commotion, any act of god or due to any injunction etc.". The new order of the NGT is nothing but Government Restrictions and as such, the First Respondent has waited till the buffer zone issue was cleared before the Hon'ble Supreme Court and the same is not intentional or deliberate.
36. The allegations made in the Claim Petition that the Respondent is making attempts to create third party rights in respect of the Schedule Property, in spite of having entered into JDA with the Claimants and the Respondent without constructing the apartments is trying to create third party interest in the property are all hereby denied as false and the Claimants are put to strict proof of the same.
37. The allegations made in the Claim Petition that, by violating the terms and conditions of the JDA and contrary to said terms and conditions the Respondent is making alleged transactions with out the knowledge of Claimants are all hereby denied as false and the Claimants are put to strict proof of the same.
38. The allegations made in the Claim Petition that, the Respondents has not chosen to comply with the demands made in the legal notice are all hereby denied as false, in fact the First Respondent has suitably replied the Legal notice and explained the reason for the alleged delay (i.e. new NGT orders) and as stated above the Respondent is /23/ Com.A.P.No.98/2023 are not aware of the institution of C.M.P. No. 134/20, before the Hon'ble High Court of Karnataka and they only came to know the same from this proceedings.
39. There is no cause of action for filing this Claim Petition and in the Claim Petition the Claimants have failed to narrate the required narration regarding the cause of action and hence on this single score itself the Claim Petition is liable to be dismissed.
40. Further the prayer for declaration that the JOINT DEVELOPMENT AGREEMENT dt: 26.05.14 (bearing document No. GNR-1-00597/2014-15) is invalid and canceled and for grant of function and also for the direction for return of Original documents is not maintainable in law and the entire Claim Petition is liable to be dismissed with costs.
41. Even now the First Respondent is ready and willing to perform its part of contract and it has spent huge considerable amount on the above said project and as stated above, non-completion of the project is for the above non-competition of the project is for the above said genuine reasons i.e. for the buffer zone issue and now as the Hon'ble Supreme Court has clarified the same, there is no issue regarding the same, but on the other hand the Claimants are not co-operating for the new Plan sanction as per Hon'ble Supreme Court directions.
/24/ Com.A.P.No.98/2023
42. As stated above, after obtaining necessary clearances, initially i.e. 27.03.2015 the Respondent has submitted the Plan to BDA for its approval and on receipt of the same, BDA has written a Letter on 18.07.2016 and directed to leave the set back (buffer zone set back) as directed by the NGT on 04.05.2016 in its Original Application No. 222/14 (i.e. to leave 75 meter, 50 meter, 35 & 25 meter buffer set back as applicable) and to re-submit the Plan for approval and subsequently as the matter was pending before the Hon'ble Supreme Court, in the interest of both Land Owners and the First Respondent waited for the final result from the Hon'ble Supreme Court, regarding set back and as the same was decided by the Hon'ble Supreme Court. Due to pendency of the cases before the Hon'ble Supreme Court regarding Buffer Zone, the First Respondent could not start and complete the project and now very recently the Orders of the NGT has been canceled by the Hon'ble Supreme Court and thereafter the First Respondent basing upon the Judgment of the Hon'ble Supreme Court, on 14.05.2019 re-submitted the Plan for approval and when as the same was in process, when the B.D.A. officials visited the spot for survey, the Claimants have objected for the same and further failed to co-operate for the same and not satisfied with their attempts to stall the proceedings, the Claimants with an ulterior motives on 12.06.19 submitted their objections for plan sanction and requested the authority to not to approve the Plan and on receipt their objections, B.D.A. has inclined to sanction the plan and on /25/ Com.A.P.No.98/2023 26.08.2019 written a letter to that effect. The Claimants further lodged a written Police complaint on 04.08.20 with Indiranagar Police and for the said Police complaint, the First Respondent submitted its detailed reply/statement explaining all the facts i.e. payment of Good Will of ₹. 60 Lakhs and NGT orders etc. From the above it is very crystal clear that, the Claimants themselves are not willing to perform their part of contract and objecting for the Plan sanction, and harassing these Respondents from all the angles and are trying to cause huge loss to the Respondents. As stated above, the First Respondent has invested and spent huge amount on the above said project and now at this juncture, for no fault of its, if the JOINT DEVELOPMENT AGREEMENT is canceled and if any Order is passed by this Hon'ble Arbitrator, the Respondents will be put to huge monetary loss and irreparable injuries will be caused to them and the same cannot be compensated in any way. But on the other hand no hardship or injuries will be caused to claimant, if the Claim Petition is dismissed. Even in COVID pandemic situation, the First Respondent is ready and willing to perform its part of the contract, but on the other hand, the Claimants are not co-operating and objecting for the same. The Claimants have not approached with clean hands and they have suppressed several material facts and filed this Claim Petition, only with a sole intention to harass and to extract further good will. Hence the Claim Petition is liable to be dismissed.
/26/ Com.A.P.No.98/2023
43. As stated above they have spent huge and considerable amount for the above said project nearly more than Two Crores with an intention and ambition to give effect to the JOINT DEVELOPMENT AGREEMENT and to complete the project i.e. for preparation of Plan, drawings, designs, Survey, Katha Transfer, NOC from Panchayath for Plan approval, NOC from Pollution Control Board, land Conversion, Stamp duty and Registration fee of JOINT DEVELOPMENT AGREEMENT & G.P.A., Electric Pole shifting, Legal expenses, brokerage and out of pocket expenses, apart from paying Good Will of ₹. 60 Lakhs and the details of the amount spent on the above Project. The Respondent has furnished break-up of the expenses alleged to have incurred by it amounting to ₹.1,98,82,036/-.
44. If at all if the Respondents were not interested in implementing the project, there was no necessity for them to spend such a big and huge amount as under:
i) Refundable Security Deposit amount paid as shown in JOINT DEVELOPMENT AGREEMENT ₹. 2,00,000/-.
ii) Amount paid to Claimants as ₹. 60,00,036/- per MOU dt: 04.03.2013.
iii) JOINT DEVELOPMENT AGREEMENT & G.P.A. -stamp duty Registration fee and out of pocket expenses on that behalf ₹. 11,26,000/-.
iv) Conversion charges and out of pocket expenses on that behalf. ₹. 4,60,000/-.
/27/ Com.A.P.No.98/2023
v) Katha Transfer Fee and out of pocket expenses on that behalf. ₹. 4,96,000/-.
vi) Electric pole shifting charges and expenses on that behalf ₹. 3,00,000/-.
vii) Architecture fees for ₹. 25,00,000/- Plan, drawings & designs.
viii) Survey charges and out of pocket expenses on that behalf ₹. 3,00,000/-.
ix) Expenses incurred for Plan approval, Panchayath NOC ₹. 35,00,000/-.
x) Expenses incurred for Pollution Control Board NOC ₹. 4,00,000/-.
xi) Brokerage paid to brokers for securing the Land ₹. 21,00,000/-.
xii) Legal charges paid for the Legal Opinion etc. the project ₹. 5,00,000/-.
xiii) Out of Pocket expenses, Conveyance expenses etc. ₹. 5,00,000/-.
xiv) Salary to project ₹. 10,00,000/- manager and other staff.
xv) Administration expenses ₹. 5,00,000/- Total ₹. 1,98,82,036
45. The Respondent has prayed the Tribunal to dismiss the Claim Petition and to grant Counter Claim directing the Claimants to co-operate for the development of Schedule Property as agreed in JOINT DEVELOPMENT AGREEMENT and if at all if this Hon'ble Arbitrator comes to the conclusion /28/ Com.A.P.No.98/2023 that the Claimants are entitled for the relief of cancellation of JOINT DEVELOPMENT AGREEMENT and return of Original documents and in that event, Claimants may be directed to return/ refund the amount received by them, with the expenses incurred on the project as shown above i.e. in all ₹. 1,98,82,036/- (Rupees One Crore ninety eight Lakhs eighty two thousand thirty six only) together with interest 18% p.a. from the date of JOINT DEVELOPMENT AGREEMENT, till its realization. It is submitted that, due to the change of usage of lands i.e. conversion of lands, the land value is also appreciated considerably and apart from conversion also the land value has been considerably increased from year 2014 and the Claimants are also liable to compensate for the same to the Respondents. Hence the Respondents are entitled to continue with the development work and for any reasons if this Hon'ble Arbitrator comes to the conclusion that the JOINT DEVELOPMENT AGREEMENT needs to be cancelled and in that event order for payment of ₹. 1,98,82,036/- (Rupees One Crore ninety eight Lakhs eighty two thousand thirty six only) to the Respondents.
The Claimants have filed Rejoinder to the Counter Claim made by the Respondent as under:
46. The amended statement of objections filed by the Respondents is not maintainable either in law or on facts and circumstances of the case. Since the amended statement of objections filed is belated, perverse and against to the principles of natural justice. Since /29/ Com.A.P.No.98/2023 Respondents are creating the list of expenditure made and to file false counter without having any basis of documents regarding spending of amount. Hence the amendments /averments are to be dismissed in limine with costs.
47. The averments and allegations made in the amended statement of objections are denied as false and that there is no cause action to such huge amount. There is no single point to believe the claim of the Respondents. The Respondents are intentionally dragging on the proceedings without complying with the conditions of alleged MOU dated: 04/03/2013 and consequently execution of JDA dated: 26/05/2014. Since the Respondents are cheaters, made fraud to the Claimants and also in and around Bangalore city by obtaining certain documents illegally.
48. The Claimants did not receive any of the amount from the Respondents in view of alleged MOU dated:
04/03/13 and execution of JDA dated: 26/05/2014. The Respondents also did not pay any of the amounts to the Claimants as stated in the statement. For which there are no documents executed, regarding the money paid, in the presence of witnesses. Even the Respondents did not inform regarding spending of the amount for obtaining any of the documents and did not furnish to the Claimants at any point of time throughout. The Claimants did not execute any GPA, Affidavit, Agreement, etc., in favour of Respondents. The amount mentioned at ₹. 1,98,82,036/- (₹. One Crore Ninety /30/ Com.A.P.No.98/2023 Eight Lakhs Eighty Two Thousand Thirty Six claimed in the statement only to defraud the Claimants and to knock off the valuable prime land. When the Respondents have not performed their part of contract as per alleged MOU dated:
04/03/2013 and JDA dated: 26/05/2014, the question of further performing the contract does not arise and to re- claim the Schedule Land on the basis of JDA also does not arise. The other allegations are put to strict proof by the Respondents.
49. The Respondents have not paid the amount of ₹.60,00,036/- to the Claimants as per the alleged MOU dated 04.03.2013 and any other huge amounts spent for the purpose of obtaining the documents, for which the Respondents did not inform nor obtained the consent from the Claimants regarding spending of the said amounts without having any proper documents. The creation of story regarding spending of ₹. 1,98,82,036/- (₹. One Crore Ninety Eight Lakhs Eighty Two Thousand Thirty Six only) for the purpose of obtaining the documents is made only with an intention to knock off the prime valuable Property, consequently the Respondents are not entitled to claim the said amount; which are all forfeited on the basis conditions of alleged MOU dated 04.03.2013 and JDA dated 26.05.2014, since the time is essence of contract as stipulated in the said deeds in accordance with law. Since the Claimants are agriculturists depending upon the income of the agricultural activities from the Schedule Property /31/ Com.A.P.No.98/2023 bearing Sy. No. 118, new Sy. No. 118/1, measuring 1 acre only, out of 1 acre 10 guntas, situated at Avalahalli village, Singanayakanahalli post, Yelahanka Hobli, Bangalore North Taluka, Bangalore district 560064, Claimants have been facing innumerable financial problems.
50. The law does not permit unless and until the Respondents performs their part of contract as per the conditions stipulated the execution of Registered JDA, the question of permitting the Respondents to make their counter claim does not se. The Respondents have not any financial stability to proceed further with the project. To protract the proceedings, the Respondents are creating the story to complete the project and falsely stated that they have spent huge amounts for obtaining the documents.
51. From the beginning after the execution of JDA, the Respondents have not replied nor intimated to the claimants about the progress of work for obtaining the concerned papers to complete the project work or their existence of financial stability for completing the project, though there is a condition precedent to complete the work within a stipulated time of 45 months and to obtain all the revenue documents as well as other process of documents for construction of the apartments as per JDA and even the Respondents did not pay the rent @ rate of ₹.2/- per month per sq. ft. as undertaken in the JDA. The Respondents have failed to perform all the conditions without initiation to /32/ Com.A.P.No.98/2023 receive the said concerned documents. From 2014 to till date, the Respondents did not inform the claimants about the expenditure spent for the said project and obtaining the proper documents and did not keep informed the claimants about the progress of the project or about delay caused for obtaining the concerned documents. Since time is the essence of contract to complete the project and particularly by mentioning time line in the execution of the project in JDA. Hence, the JDA dated: 26.05.2014 is bad in law, not acted upon and the same is to be cancelled by allowing the above Claim Statement. Due to which Claimants are acquiring huge loss and are deprived of their earning and livelihood from 8-9 years. Even the Claimants are not carrying out their agricultural activities due to commitment of completing the project as per the conditions of JDA. The Respondent is put to strict proof of other allegations.
52. The schedule land in question is coming under the purview of Singanayakanahalli Gram Panchayath and not within the purview of Bengaluru Development Authority or within BBMP limits. Even the Respondents did not inform about the plan to be obtained and for which approval for construction of the apartments. The Respondents also did not obtain the permission from Real Estate Regulatory Authority. The Claimants have obtained all the documents specified in the MOU dated: 04.03.2013 and JDA at their own costs. The Claimants have incurred the expenditure for obtaining the nil encumbered documents, including /33/ Com.A.P.No.98/2023 conversion of the Schedule Property by selling 10 Guntas in re-Sy. No. 118/1 of Avalahalli in favour of Sri. M S Raksha Ramaiah (a portion of Schedule Property) on: 23.02.2013 for sale consideration of 25,00,000.00 and on 04.06.2014 Claimants also sold land bearing Sy. No. 8/3A measuring 15 Guntas of Avalahalli village, Bengaluru north Talukaa for a sale consideration of ₹.1,00,00,000/- (one crore) in favour of Abhay R Hiranon. The said sale deeds dated: 23/02/2013 and 04/06/2014 are herewith produced. Therefore the Claimants are spending huge money for obtaining the documents on the schedule land by selling their other lands. Therefore the question of claiming the said amount does not arise.
53. The contention of the Respondents regarding prohibitory orders from National Green Tribunal (NGT) of the Schedule Land comes under Buffer Zone and prohibition of approval of plan by Bangalore Development Authority are all not true & correct. It is also denied that the Respondents have settled the dispute with Sri. Sayed Rasheed by paying an amount of ₹. 35,00,000.00 and consequently executed deed of Re-conveyance executed on. 23.02.2013 in favour of Claimants, with regard to spending of money regarding obtaining the conversion order, e-katha, tax paid, stamp duty, out of pocket expenses for shifting of electric poles, architecture fees for plan, drawing and designs, survey charges, expenses incurred for plan approval, Panchayat NOC, pollution NOC, brokerage paid to brokers, legal /34/ Com.A.P.No.98/2023 charges, convenience expenses, salary to the employees, charges for administration expenses are false and denied and there is no truth in claiming the same, which is nothing but cock & bull story to squeeze the said money from the poor Claimants and to knock off the valuable schedule land. The Respondents did not pay any amount to the Claimants or to any others to obtain the documents for which there is no single document executed before any of the witnesses for spending the said amount nor taking the consent. When the Respondents are not performing the contract & conditions stipulated in the MOU and JDA, the question of spending the amount for obtaining the documents does not arise and are not entitled for any of the claim amount.
54. At the time of obtaining documents, including the conversion, e-katha etc the amount was spent by the Claimants by obtaining loans from friends, well wishers, relatives etc and after selling the property bearing Sy. No. 118, new sy no 118/1 measuring 10 guntas of avalahalli village in favour Mr. Raskshramaiah on a sale consideration of ₹. 25,00000/- and also sold the land bearing Sy. No. 8/3A measuring 15 Guntas of Avalahalli on a sale consideration of ₹.100,00,000/- and paid it to the said credits and also for obtaining the annexed documents in respect of the Schedule Property. The Claimants have furnished the certified copies of documents as under:
1) Certified copy of the sale deed dated 23/02/2013;
/35/ Com.A.P.No.98/2023
2) Certified E-mail copy of the sale deed dated 04/06/2014;
3) Original copy of endorsement dated 22/09/2014 regarding free from section 79(A) (B) and section 80 of Karnataka land Reforms Act.
55. If the claim of the Claimants is not allowed, the Claimants will be put to greater hardship, substantial injury and irreparable loss. The Claimants are depending upon the said land for their livelihood, who are also joint family members.
56. The Claimants have prayed the Tribunal to dismiss the Counter Claim and consequently allow the Claim Petition.
57. On the basis of the rival pleadings, the Learned Arbitral Tribunal has framed the following Issues for its determination.
ISSUES
1. Whether the Claimant proves that the Respondent has violated the terms and conditions of Joint Development agreement dated 26.05.2014?
2. Whether the Claimant proves that they are entitled for cancellation of Joint Development agreement dated 26.05.2014?
3. Whether the Claimant proves that they are entitled for a declaration that the Joint Development agreement dated 26.05.2014 is /36/ Com.A.P.No.98/2023 invalid and entitled to develop the Schedule Property?
4. Whether the Claimant proves that they are entitled for injunction, as prayed for?
5. Whether Respondent proves that it was not able to complete the project due to circumstances beyond its control?
6. Whether the respondent proves that the Claimant has committed breach of the terms and conditions of Joint Development agreement dated 26.05.2014?
7. Whether the respondent proves that they are entitled for an amount of 1,98,82,036/- claimed in counter-claim?
8. Whether the Respondents prove that the claim of the Claimants is barred by time?
9. Whether the Respondents prove that the claim of the Claimants is bad for mis-joinder of parties?
10. What award/order?
58. The Claimant No:2 Sri. K. Natarajan was examined as PW1 by the Claimants. The PW1 has exhibited Ex. P1 to Ex.P22.
59. The Respondent No:2, Sri.Padmaiah Vappu adduced his evidence as RW2; Sri. Sharath Kumar adduced his evidence as RW2. The Respondents have exhibited Ex.R1 to Ex.83.
60. After the conclusion of the Trial and upon hearing the rival arguments, the learned Arbitral Tribunal has passed the Award on 12.06.2023 on the following terms:
/37/ Com.A.P.No.98/2023 AWARD
a) The Claim of the Claimants is partly allowed.
b) The Counter-Claim of the Respondent is partly allowed.
A. Ex.P1 Joint Development Agreement and Ex.R5 General Power of Attorney stand cancelled as prayed for, subject to payment of ₹.65,00,000/- awarded as counter claim by the Claimants to the Respondent.
B. The Respondent or their agents or anybody claiming under or through the Respondent, are permanently restrained from interfering with the possession and enjoyment of the schedule property by the Claimants.
C. The Claimants shall pay ₹.65,00,000/-to the Respondent within a period of three months from the date of award-failing which, the Respondent is at liberty to recover the same in accordance with law.
c) The Stamp duty is payable as per Karnataka Stamp Act.
d) The award is signed and issued in 3 originals, one for record of Arbitration Centre and rest of the two to each of the parties.
61. The respondent in AC.No.178/2021 being aggrieved by the impugned award has filed Com.A.P.No:98/2023 for the following among other grounds.
62. The respondent has reiterated the facts pleaded in its claim statement of defense filed before the learned Arbitral Tribunal.
63. The Hon'ble Arbitrator erred in granting the relief of cancelling the JDA and GPA dated 26/05/2014 as the same is violative of the Indian Contract Act and the specific terms of /38/ Com.A.P.No.98/2023 the JDA and GPA 26/05/2014. The provisions of the Indian Contract Act mandate that agency coupled with interest cannot be terminated without the express clause authorising the same in the contract.
64. The Hon'ble Arbitrator in the Impugned Award has rightfully held that the JDA and GPA dated 26/05/2014 must be read with the MOU dated 4/03/2013, which forms the part of same transaction. The Hon'ble Arbitrator has also confirmed that the Respondents herein have received a consideration of ₹.50,00,027/- (Rupees Fifty Lakhs Twenty Seven only) at the time of execution of the MOU dated 04/03/2013. Furthermore, it is also established that the Respondent herein has received a sum of ₹. 2,00,000/- (Rupees Two Lakhs only) as a security deposit under JDA dated 26/05/2014. As per the terms of the JDA dated 26/05/2014 (Clause 2.3), the Petitioner herein is entitled to a share of 66% (Sixty Six Percent) of the constructed area. Thus, it is clear that the MOU, JDA cum GPA executed are along with interest and it is evident from the terms of the JDA and GPA that no termination clause is incorporated in the said MOU, JDA or GPA. Furthermore, it is clearly mentioned in the GPA that the said Power of Attorney being coupled with interest shall be irrevocable in nature and the parties shall not be entitled to revoke the same unilaterally. Therefore, the Hon'ble Arbitrator erred in granting the relief of cancellation of JDA cum GPA ignoring Section 202 of the canceling Indian Contract Act.
/39/ Com.A.P.No.98/2023
65. It is settled law that if an agency is created for consideration or the agent himself has an interest in the property, the same should be treated as coupled with interest. The Hon'ble Arbitrator has completely ignored the settled position of law and proceeded to pass the impugned award without even considering the provisions of the Indian Contract Act and settled position of law on this point while deciding the question of canceling the GPA and the JDA.
66. The Hon'ble Arbitrator's Award is liable to be set aside as the same is passed per incurim. Although the Hon'ble Arbitrator framed the issue regarding the cancellation of JDA dated 26/05/2014 as: "Whether the Claimant (Respondent herein) proves that they are entitled for cancellation of JDA dated 26/05/2014?", evidently, no arguments were led on the said issue of cancellation of JDA and the same was granted without examining the law on the said issue. The Hon'ble Arbitrator's conclusion on the said issue is not backed by either law or reason. The Hon'ble Arbitrator has decided the issue of cancellation of JDA cum GPA solely on the basis of the breach of the terms of the JDA, and without considering the aspect of termination of the Agency, which is specifically dealt with in Chapter X of the Indian Contract Act. The Award passed by the Hon'ble Arbitrator clearly suffers from an error of law that goes to the root of the controversy in issue and the same is liable to be set aside by this Hon'ble Court.
/40/ Com.A.P.No.98/2023
67. The JDA dated 26/05/2014 specifically stipulates that the party who suffers a breach by the other party of any terms of this agreement is entitled to the relief of specific performance of the contract and also be entitled to recover all losses, damages, and expenses incurred as a consequence of such breach from the party committing breach (Clause 24). The Hon'ble Arbitrator has rightfully held that the Petitioner is not solely responsible for the breach of the JDA, even if one were to assume, but not concede that the Petitioner has breached the terms of the JDA, the Respondents were entitled to the relief of specific performance or damages/delay fee. The Hon'ble Arbitrator had power to grant the relief that they are not empowered under the terms of the JDA. It is trite law that the Hon'ble Tribunal does not have the power to alter or modify the terms of an agreement that could result in the creation of a new contract between the parties. The Arbitral Tribunal, being a creature of the contract, is bound by the terms and conditions of the contract, and an award passed by the Arbitral Tribunal is patently illegal if the Tribunal has not acted as per the terms of the contract. An Arbitral Tribunal is not a court of law and cannot exercise power ex debito justitiae, and alter the terms and conditions of a valid contract. By going against the explicit terms of the JDA, the Hon'ble Tribunal has committed an error without jurisdiction' as it exercised a power which was not conferred on it.
/41/ Com.A.P.No.98/2023
68. The Hon'ble Arbitrator has proceeded to pass the impugned award to cancel the GPA when there is no specific prayer in the claim by the Respondents seeking cancellation of the GPA. The award passed by the Hon'ble Arbitrator insofar as it relates to canceling the GPA is patently illegal in the absence of any prayer and the same is liable to be set aside.
69. The Hon'ble Arbitrator has ignored a vital piece of evidence in concluding that the Petitioner is also liable for the breach of the JDA. The Hon'ble Arbitrator has held that the Petitioner has applied for the plan sanction within a reasonable time in pursuance of its obligation under the JDA. The Petitioner took the contention that the plan sanction could not be obtained due to the Hon'ble NGT's Order dated 07/05/2015 as the same mandated that a setback of 50 mts. must be left from the edge of the Raja Kaluve. Although the Respondent produced E-Khata (Ex. R3) and a report by a taluk surveyor (Ex. R12) to prove that a Raja Kaluve exists on the eastern side of the Schedule Property, the Hon'ble Arbitrator has held that it is not clear whether the said Raja Kaluve falls within or outside the 1 Acre out of the entire extent of 1 Acre 10 Guntas of the Schedule Property, within which the apartments were to be constructed. Further, upon comparing the original survey sketch (Ex. R69), a downloaded copy of the Master Plan (Ex. R70), and the certified copy of the village map (Ex. R71), the Hon'ble Arbitrator has held that it is not clear whether /42/ Com.A.P.No.98/2023 the Nala adjacent to the Schedule Property is a Raja Kaluve / Storm Water Drain as categorised in the Hon'ble NGT's Order dated 07/05/2015. The Hon'ble Arbitrator has refused to apply the force majeure clause based on the aforesaid reasons. It is apposite to mention that the Hon'ble Arbitrator, vide Order dated 13th March 2023, has refused to allow the Interim Application filed by the Petitioner under Order 26 Rule 9 R/w Section 151 seeking the appointment of Commissioner for local inspection and to report to the court along with a sketch whether there exists a Raja Kaluve on either side of the Schedule Property and its category. The Hon'ble Arbitrator has refused to allow the said IA holding that there can be a finding given with respect to the existence or otherwise of a Nala based on the documents furnished by the Petitioner. The aforesaid reason is at odds with the findings arrived by the Hon'ble Arbitrator in the Impugned Award. Even otherwise, the Hon'ble Arbitrator has ignored the letter by BDA to the Petitioner dated 18/07/2016 (Ex R83); Wherein, the Petitioners were asked to submit the application for plan sanction after leaving the necessary setback as per the Hon'ble NGT's Order dated 17/05/2016. Assuming arguendo that the Hon'ble Arbitrator was right in his assessment pertaining to the Nala, the aforementioned letter acted as an impediment for the Petitioner to proceed with the development of the Schedule Property, and the same ought to have been held as a force majeure event. It is a trite law that ignoring a vital piece of evidence amounts to patent illegality and the award that suffers from patent /43/ Com.A.P.No.98/2023 illegality deserves to be set aside. The Hon'ble Arbitrator has ignored the BDA's letter dated 18/07/2016 in giving a finding on the force majeure and hence the same is liable to be set aside. The Hon'ble Arbitrator's reasoning that the Petitioners have not taken any effective steps regarding the aforesaid letter is fallacious and contrary to the terms of the JDA. As per Clause 4 (d) of the JDA, the obligation to remove legal impediments was on the Respondents and shifting the same on the Petitioner amounts to rewriting the contract, and the same is liable to be set aside by this Hon'ble Court.
70. The Hon'ble Arbitrator, on multiple occasions in the Impugned Award, has chastised the Respondents herein for their conduct. The Hon'ble Arbitrator has held that the Respondents herein have not approached the Tribunal with clean hands and they are guilty of suppression of material facts. The Respondents have denied the receipt of the entire consideration under the MOU dated 04/03/2013 and the JDA dated 26/05/2014. Further, the Respondents blatantly denied all the documents that the Respondents produced just to further their allegations against the Petitioner, although there was no doubt as to the veracity of the same. The Hon'ble Arbitrator has also held that the Respondents are also guilty of breaching the terms of the JDA dated 26/05/2014 as they have not co-operated with the Petitioner in developing the Schedule Property. Thus being the case, the Hon'ble Arbitrator ought to have refused to grant the relief sought by the Respondents as it is a settled principle /44/ Com.A.P.No.98/2023 of equity that "nemo auditor propriam turpitudinem allegans" (No one can be heard, who invokes his own guilt).
71. Assuming arguendo that the Hon'ble Arbitrator has cancelled the JDA and GPA validly, the Hon'ble Arbitrator committed a grave error in not awarding interest on the amount spent by the Petitioner. The Hon'ble Arbitrator has held that the Respondents have contributed towards the impediments in the development of the Schedule Property, and the Respondents are equally liable for the breach of the terms of the JDA. As per the legal maxim "in pari causa turpitudinis cessat repetitio" where both parties are guilty, no one may recover), the Hon'ble Arbitrator ought not to have granted the relief sought by the Respondents, and if the Hon'ble Arbitrator chose to grant the relief, he was duty bound to place the Petitioners in the same position as they were prior to entering into the JDA. The Hon'ble Arbitrator has awarded a refund of the amounts spent by the Petitioner, albeit without interest. The Petitioners have spent their valuable time and hard earned money in developing the Schedule Property and the refund of the amounts that they have spent ought to be awarded along with interest if the Petitioners were to be placed in the same position as they were, prior to the execution of the JDA. The Petitioner would suffer injustice if the Impugned Award is not set aside as the Petitioners' refund amount does not carry interest along with it.
/45/ Com.A.P.No.98/2023
72. The Hon'ble Arbitrator has grossly erred in refusing to direct the Respondents to pay the amounts spent by the Petitioner [as sought in the alternative prayer] and only allowing a sum of ₹.65,00,000/. The Hon'ble Arbitrator ought to have seen that as on the date of the MOU, the Schedule Property was subject to litigation and the Respondents got the said litigation resolved from the amount paid by the Petitioner under the MOU. It is also pertinent to mention here that Schedule Property was agricultural land as of the date of the MOU and the Petitioner has got the Schedule Property converted and for the E- Katha from the Panchayath for the said property by spending its valuable money and time. The Hon'ble Arbitrator has completely ignored the efforts put and money spent by the Petitioner in getting the Schedule Property to the stage of development and also ignored the fact that the cancellation of the JDA and refusing the refund of the amount spent by the Petitioner with interest would amount to unjust enrichment to the Respondents and the same would cause great injustice to the Petitioner.
73. As per Clause 26 of the JDA dated 26/05/2014, the seat of the Arbitration was Bangalore. The cause of action is in respect of erroneous findings regarding the Impugned Award dated 12/06/2023.
/46/ Com.A.P.No.98/2023
74. The Petitioner has a right to challenge the Award before this Hon'ble Court and hence this Hon'ble Court has the Jurisdiction to entertain this Arbitration Petition.
75. The Award was pronounced on 12th June 2023, hence, the present Petition is within the limitation period prescribed under section 34 (3) of the Arbitration and Conciliation Act.
76. The above Arbitration suit is filed under Section 34 of the Arbitration and Conciliation Act, 1996, read with Rule 4 of the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules 2001 challenging the Award dated 12/06/2023 passed by the Sole Arbitrator in the matter of Arbitration dispute between the Petitioners and the Respondents herein. As per schedule II, Article 11 (n) of the Karnataka Court Fees and Suits Valuation Act, a fixed court fee of ₹.100/- is paid on the above Arbitration Petition as it is to be registered as an Arbitration Suit under Rule 4(b) of the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules, 2001. Hence, the Hon'ble Court may pleased to allow the petition filed by the petitioner herein.
77. After the service of notice the claimants appeared through their advocate and have filed their statement of objections as under:
/47/ Com.A.P.No.98/2023
78. The petitioner has filed the above appeal against the respondents seeking to set aside the award dated:
12/06/2023 in AC No.178/2021 and to allow the counter claims made by the on the file of the Sole Arbitrator, Shri. Veeranna G. Tigadi, at the Arbitration & Conciliation Centre, Bengaluru (Domestic & International) and other consequential reliefs sought.
79. The allegations and averments made in the appeal memorandum for the reliefs sought are all denied as false and there is no truth in filing the same, except to specifically admitted. For which, respondents also filed Com. A. P. No. 128/2023, before this Hon'ble court, seeking to set-aside the award by partly allowing the counter claim for ₹.65,00,000/- (₹. Sixty Five Lakhs) and to pay the same to the appellant with in a period of 3 months from the date of award, failing which the respondents is at liberty to recover the same in accordance with law in A.C:178/2021 dated: 12/06/2023 passed by the sole Arbitrator.
80. The Respondents herein are not liable to refund ₹.65,00,000/- to the petitioner herein, due to MOU dated:
04/03/2013 executed between the parties with a condition that, after execution of JDA dated: 26/05/2014, the Good- Will amount received through MOU dated: 04/03/2013, will need not be repaid to the petitioner herein. Even, on the terms and conditions stipulated regarding the duration to complete the project by executing registered JDA dated:
/48/ Com.A.P.No.98/2023 26/05/2014 and the GPA dated: 27/05/2014, as per contract on delay and latches and on the conditions, respondents also need not pay the said awarded amount of ₹.65,00,000/- to the petitioner. Hence, the respondents herein have challenged and filed Com. A.P. No. 128/2023 pending before this Hon'ble court. Hence on delay and latches due to non completing the project in view of JDA dated: 26.05.2014. Even the petitioner has not paid of ₹. 10,00,009/- out of ₹.6,00,027/- as per MOU dated 04/03/13. Hence the above petition is to be dismissed.
81. The Sole Arbitrator has passed a speaking order allowing the claim petition and to cancel the Ex.P.1- Ex.P.1 JDA 26/05/2014 and Ex.R.5-GPA dated: 27/05/2014 and also granting permanent injunction against the petitioner from interfering with the Respondents peaceful possession and enjoyment of the schedule converted vacant land beanie Sy No.118, New SY No.118/1, measuring 1 Acre, situated Avalahalli Village, Singanayakanahalli Post, Bengaluru Nort Taluk, except by awarding of ₹.65,00,000/- as counter claim made by the petitioner. The said amount awarded is illegal and the petitioner is not entitled for repayment by the respondents.
82. The respondents by referring to Clause 8.1, 11, 23.4 of JDA dated 26.05.2014 have stated that the petitioner is not entitled for payment of goodwill amount of ₹.50,00,00/- and also the expenses incurred towards registration of JDA /49/ Com.A.P.No.98/2023 and GPA in all ₹.65,00,000/-, as the petitioner has failed to perform its obligations under JDA dated 26.05.2014. The respondents have performed their part of the obligation under MOU dated 04.03.2013 and JDA dated 26.05.2014.
83. The respondents have established the delay and latches committed by the petitioner by exhibiting documents and also cross-examining the petitioner. The petitioner has created a story about NGT Orders.
84. The respondents have reiterated the averments made in their claim statement filed before the learned Arbitral Tribunal in their Statement of Objections filed in this case.
85. After the passing of award dated 12.06.2023 by the Arbitral Tribunal, the respondents had filed an application under Section 33(1) of the Act seeking a direction to the Arbitration Centre to send the award dated 12.06.2023 to the Sub-Registrar, Gandhinagar (Ganga Nagar), Bengaluru to cancel the JDA dated 26.05.2014 and GPA dated 27.05.2014 and to return the original documents. The said application was partly allowed. Ther petitioner herein was directed to return the original documents of the claimants in respect of schedule property including the JDA dated:
26/05/2014 and GPA dated 27/05/2014 executed by the claimants on cancellation of the same and consequently issued a covering letter to the concerned Sub-registrar for /50/ Com.A.P.No.98/2023 cancellation of the same. Accordingly on the basis of the said direction, the Sub-Registrar Ganganagar Bengaluru has canceled the JDA dated: 26/05/2014 and GPA dated:
27/05/2014, on: 25/08/2023, in No. GNR-1-03585/2023-24. Therefore, issued nil-encumbered documents. Hence the above petition becomes infructuous and consequently liable to be dismissed with costs.
86. The respondents have prayed the Court to dismiss the petition with costs.
87. I have heard the arguments addressed by the learned advocates on record. The Learned Counsel for the Claimants and the Respondent have submitted their respective written synopsis.
88. The Learned Counsel for the Respondent has relied on the following citations in support of his case:
Sl.No. Particulars Citations
01. Orient Transport C., V. Jaya AIR 1987 SC 2289 Bharath Co.,
02. Alupro Building System Pvt., 2017 (162) DRJ 412 Ltd., Vs. Ozone Overseas Pvt., Ltd.,
03. P.Venkata Ravi Kishore & Anr., 2022 SCC Online Vs. JMR Pvt., Ltd., TS 3387
04. Smt.Madhumati.V. The State W.P.No.103965/202 Of Karnataka & Ors., 3 Hon'ble High Court of Karnataka
05. UOI V. Recon, Mumbai (2020) 6 Mah LJ /51/ Com.A.P.No.98/2023 509
06. Indian Oil Corporation Ltd., (2022) 4 SCC 463 V.Shree Ganesh Petroleum Rajgurunagar
07. Delhi Airport Metro Express (2022) 1 SCC 131 Pvt., Ltd., V. Delhi Metro Rail Corporation Ltd.,
08. Ssangyong Engineering & (2019) 15 SCC 131 Construction Com.Ltd., V NHAI
09. Shri Shadaksharappa V. W.P.No.201274/202 Kumari Vijayalakshmi 2 (WP-CPC), Hon'ble High Court of Karnataka
10. NHAI V. Trichy Thanjavur (Comm) 95/2021, Expressway Ltd., O.M.P High Court of Delhi
89. I have gone through the materials available on record.
90. The following points arise for my determination:
(1) Whether the Plaintiff has made out a case so as to set-aside the Award dated 12.06.2023 passed by the Learned Sole Arbitrator in A.C.No.178/2021 in its entirety and remand the matter back to the Hon'ble Arbitrator for fresh consideration and to allow the Counter Claims made by the Plaintiff herein in A.C.No:178/2021?
(2) What Order?
91. My findings on the above points are as follows:-
Point No. 1 : - In the NEGATIVE
Point No.2 : - As per final orders
for the following
/52/
Com.A.P.No.98/2023
REASONS
92. Point No.1 & 2 : The Plaintiffs (Claimants in A.C.No.178/2021) in Com.A.P.No:128/2023 are praying the Court to set-aside the Award dated 12.06.2023 passed by the Learned Sole Arbitrator in A.C.No.178/2021 only in so for as by allowing the counter claim, that the claimants shall pay of ₹.65,00,000/- to the respondents within a period of 3 months from the date of award and failing which, the respondent is at liberty to recover the same in accordance with law; and to allow the claim statement made by the petitioners/claimants in A.C.No.178/2021.
93. The Plaintiff (Respondent in A.C.No.178/2021) in Com.A.P.No:98/2023 is praying the Court to set-aside the Award dated 12.06.2023 passed by the Learned Sole Arbitrator in A.C.No.178/2021 in its entirety and remand the matter back to the Hon'ble Arbitrator for fresh consideration; and to allow the Counter Claims made by the Plaintiff herein in A.C.No:178/2021.
94. In order to determine the suit it is useful to refer to Section 34 of Arbitration and Conciliation Act, 1996 which reads as under:
ARBITRATION AND CONCILIATION ACT, 1996 [Section : 34] Application for setting aside arbitral award (1) Recourse to a Court against an arbitral award may be made only /53/ Com.A.P.No.98/2023 by an application for setting aside such award in accordance with sub-section (2) and sub- section (3).
(2) An arbitral award may be set aside by the Court only if- (a) the party making the application establishes on the basis of record of the Arbitral tribunal that-
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or /54/ Com.A.P.No.98/2023
(b) the Court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
[Explanation 1.-For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33 , from the date on which that request had been disposed of by the arbitral Tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient /55/ Com.A.P.No.98/2023 cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral Tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral Tribunal will eliminate the grounds for setting aside the arbitral award.
[(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.
95. It is settled law that the Court while dealing with an application under Section 34 of Arbitration & Conciliation Act, 1996 is required to exercise its jurisdiction within the frame work of Section 34 and Section 34 (2A) of the Act. Where two views are possible in respect of a dispute, the view taken by the Arbitrator cannot be found fault with by the Court. The Court is not empowered to set aside an award under the Public Policy ground unless the award shocks the conscience of the Court. The Court shall not interfere with the award on the assumption that the award /56/ Com.A.P.No.98/2023 is unjust on the facts of the case and substitute its view for that of the arbitrator to do what it considers to be just. The Court acting under Section 34 of the Act does not sit in appeal and correct the consequential errors of facts as the arbitrator is the ultimate master of the quantity and quality of evidence. The mere erroneous application of the law is not a ground to interfere with the award under the head 'patent illegality', unless the patent illegality is apparent on the face of record/award and must go to the root of the case. The Court has to consider the grounds raised by the plaintiff seeking interference with the award in the narrow corridors of the principles enunciated under Section 34 of the Act and the ratio of the precedents. The Court shall not interfere with the Award only on the ground that the reasoning and findings of the learned Arbitral Tribunal are not in consonance with the line of case/contentions raised by the aggrieved plaintiff. The impugned Award cannot be modified or partially set aside, where the claims are interconnected and cannot be segregated from the other. The Court acting under section 34 of the Act cannot remand the matte to the Arbitral Tribunal to allow the Arbitral Tribunal to either review or reconsider the findings or conclusions that have been already rendered.
96. The prayer made by the Claimants to set aside the impugned award partially as for as awarding Counter Claim in favor of the Respondent is not available to them under Law. Likewise, the prayer of the Respondent to remand the /57/ Com.A.P.No.98/2023 matter for fresh adjudication to determine the claim of the Respondent for grant of Counter Claim in its entirety is not available to the Respondent under law.
97. The Court has to examine the reasons assigned and findings arrived at by the Arbitral Tribunal with reference to the settled principles of law.
98. The Learned Arbitral Tribunal has referred to Ex.R1/Memorandum of Understanding dated:04.03.2013 executed by A.N. Krishnamurthy (who is the father of Claimant Nos.2 and 5), Claimant No.2 K. Nataraj and Claimant No.5 K. Gopalagowda in favor of the Respondent; Ex.P1/Joint Development Agreement, Ex.R.5 - an Irrevocable Power of Attorney, Exs.R.49 to R.64 R.T.C., extracts and Exs. R.65 to R.68 mutation register extracts. The Learned Arbitral Tribunal has observed that the Schedule Property bears Survey No. 118/3 measures 1 acre 10 guntas. In ExP.65 to P.68, A.N. Krishnamurthy and his sons, Claimant No.2 Nataraj and Claimant No.5 Gopalagowda are shown to be in possession of the land measuring 1 acre 10 guntas in Survey No.118/3 whereas, Nagarathnamma and Raksha Ramaiah are shown to be in possession of 3 acres 17 guntas and 00-10 guntas of land in Survey No.118/1. The Learned Arbitral Tribunal has rightly concluded that due to many transactions, the Schedule Property has been changing as Survey No.118 and 118/1 and/or 118/3. If in any documents survey number of the Schedule Property is /58/ Com.A.P.No.98/2023 mentioned as '118/1' or '118/3', no exception can be taken by the Claimants on the said ground. The parties to the lis have not disputed the findings of the learned Arbitral Tribunal on the factual aspects of the case.
99. The Learned Arbitral Tribunal has taken Issue No;1,5 and 6 together for discussion.
100. The Learned Arbitral Tribunal after extensively referring to the evidence available on record has also observed the conduct of rival parties. It is not in dispute that the Respondent has not put up any construction in the schedule property till date. The Respondent is contending that it was not able to complete the project within the stipulated period for the circumstances beyond its control and obstructions caused by the Claimants.
101. The Respondent is contending that it has paid a sum of ₹.50,00,27-00 to Sri.Krishnamurthy, (Husband on Claimant No.1), Claimant No: 2 Nataraja and Claimant No:5 Gopalgowda at the time of Execution Memorandum of Understanding as per Ex.R1. The Respondent has paid ₹.10,00,009-00 and ₹.2,00,000/- to the Claimants on the date of execution of the Ex.P.1 Joint Development Agreement in all ₹. 62,00,036-00 to the Claimants. The Claimants have denied the payment of ₹.62,00,036-00 by the Respondent.
/59/ Com.A.P.No.98/2023
102. During the course of trial the Claimants herein have filed a Memo acknowledging the Receipt of ₹.20,00,009-00, ₹. 20,00,009-00 and ₹. 10,00,009-00 by the Claimant Nos.2, 5 and their father A.N. Krishnamurthy respectively.
103. The claimants have made a clear admission in Ex.P2 Legal Notice dated 26.3.2018, Ex.P.4 Legal Notice dated 23.7.2020 and Ex.P.5 Legal Notice dated 7.8.2020 issued by the Claimants to the Respondent about the receipt of ₹.2,00,000/- by them from the Respondent. The Learned Tribunal has rejected the claim of the Respondent that it has paid ₹.10,00,000/- to the claimant at the time of execution of Ex.P1.
104. As per Clause 8.1 of JDA, the Respondent shall commence the construction work on the Schedule Property within three months from the date of obtaining sanction of the building plan. Hence, time of 42 months mentioned above starts to run from three months from the date of obtaining sanction of the building plan.
105. Clause 11 of Ex.P.1/JDA provides that "The Second Party/Developer hereby agrees to complete the construction in all respects of the Apartment Building and the First Party/ Owners' constructed Area, within Thirty Three Months from /60/ Com.A.P.No.98/2023 the date of Construction Commencement plus Six months grace period."
106. It was the obligation of the Respondent to obtain sanction of the building plan from the competent authority and then, he has three months' time to commence the construction. Either in Ex.R.1 Memorandum of Understanding or Ex.P.1 Joint Development Agreement, no time limit is prescribed for obtaining sanctioned plan. When no time limit is fixed for doing the same cannot be postponed indefinitely and such an obligation has to be performed within a reasonable time'. The claimants are contending that the Respondent has not made any efforts to obtain sanctioned plan and commence the construction of Apartment Complex.
107. The Learned Arbitral Tribunal after considering Ex.R7, Ex.R6, Ex.R8, Ex.R9, Ex.R10, Ex.R79 has come to a conclusion that the Respondent has made appropriate application for sanction of plan within a reasonable time from the date of execution of Ex.P.1 Joint Development Agreement.
108. The learned Arbitral Tribunal has rightly rejected the contentions raised by the Claimants that the Bangalore Development Authority is not the competent authority to /61/ Com.A.P.No.98/2023 sanction the plan of the building to be constructed on the Schedule Property.
109. From the materials available on record it is evident that as per the order of the National Green Tribunal dated: 07.05.2014 passed in O.A.222/14, the buffer zones measuring 50 meters, 25 meters, and 15 meters measured from the edge of the drains viz., 1) primary 2) Secondary 3) Tertiary from respective drains.
110. The order of the National Green Tribunal was challenged before the Hon'ble Supreme Court of India in Civil Appeal No.5016/2016 and other appeals. The said appeal was disposed of by an order dated 5.3.2019- in which, the above said condition was modified and the buffer zone was ordered to be measured from the centre of the Raja Kaluve.
111. In the light of above orders the learned Tribunal has examined the factual matrix of the case regarding the existence of Raja Kaluve on the Eastern side of Schedule property as contended by the Respondent. On a detailed analysis of the materials available before it the learned Arbitral tribunal has come to the conclusion that it is not possible to know whether there exists Raja Kaluve/Storm Water drain as categorized in the order of the NGT in O.A.No.222/2014.
/62/ Com.A.P.No.98/2023
112. The Respondent is contending that the learned Arbitral Tribunal ought to have allowed his application filed Under Order XXVI Rule 9 r.w.s. 151 CPC to appoint a Court Commissioner for local inspection to know regarding the existence of Raja Kaluve (Nala) on the side of the schedule lands or not and its category. The Learned Tribunal has dismissed the application vide order dated:12.03.2023 opining that if the application is allowed it amounts to collection of evidence. The Learned Arbitral Tribunal has assessed the contention of the respondent regarding the existence of Raja Kaluve on the Eastern boundary of the Schedule Property and recorded a finding that whether the said Raja Kaluve/Storm water drain could fall within the category of drains referred to in the order of NGT. Having regard to scope of Section 34 of the Act, this Court refrains from allowing the prayer of the Respondent to remand the matter to the Tribunal for fresh consideration of the said application.
113. The learned Tribunal after careful analysis of the materials available before it has come recorded a finding that in spite of efforts made by the Respondent to have a modified plan the claimants did not extend their co- operation. Instead, the Claimants went on filing police complaints against the Respondent. It was necessary for the respondent to seek consent of the Claimants to obtain modified plan as it would reduce the share of claimants and respondent in the constructed building and undivided /63/ Com.A.P.No.98/2023 interest in the land. As the Claimants have failed to extend their cooperation, the respondent could not proceed further to gt the modified plan. In these circumstances, the conclusion of the learned Arbitral Tribunal that both the Claimants and respondents are able to prove against each other that they have committed violation of terms and conditions of Ex.R1 Memorandum of understanding and Ex.P1 Joint development Agreement and that the Respondent has failed to prove that it was not able to complete the project due to the circumstances beyond its control calls for no interference by this Court.
114. Issue No.8 and 9: The Respondent has raised an objection that the claim petition is bad for mis-joinder of party (Issue No8) and the Claim petition is barred by limitation (Issue No.9).
115. From the materials available on record it is evident that the claimants had issued Notice as per Ex.P2 dated:26.03.2018 and the respondent has replied the same vide reply notice Ex.P.14 dated:03.04.2018. The Claimants had terminated the agreement vide Ex.P2 notice. The Claimant was required to initiate legal proceeding within 3 years from 26.03.2018. In view of the directions issued by the Hon'ble Supreme Court of India in Re suo moto W.P. (Civil) no:3/2020, the period between 15.03.2020 to 28.02.2022 has to be excluded for the purpose of computation of limitation. The Arbitrator was appointed as /64/ Com.A.P.No.98/2023 per the order dated:15.01.2021 passed by the Hon'ble High Court of Karnataka in CMP No.134/2020. Hence, the Claim Petition filed by the Claimants is not barred by Limitation.
116. The Respondent is contending that the Respondent No:2 is not a necessary party to the proceeding as Respondent No:2 cannot be held liable in his individual capacity. The Claimants have described Respondent No:1 as a Public Limited Company, though in fact the Respondent No:1 is a Private Limited Company. The description of Respondent No:2 and the explanation made in the claim statement shows that the Claimants have arrayed Respondent No:2 as the Managing Director of Respondent No.1 though they have stated that the Respondent No:1 is represented by its Managing Director. The Claimants have clearly stated that the Respondent No:1 and 2 are one and the same. They are not seeking any relief against Respondent No:2 in his personal or individual capacity, as such the Claim petition filed by the Claimants is not bad for mis-joinder of parties.
117. The Learned Arbitral Tribunal has rightly analyzed the materials before it and has rightly answered Issue No:8 and 9 in the NEGATIVE, which calls for no interference by this Court.
/65/ Com.A.P.No.98/2023
118. Issue No.7: The Respondent is making counter claim for ₹.1,98,82,036/- and has furnished break-up. The learned Tribunal has observed that the Claimants and Respondent are responsible for non implementation of the project; as such the claimants are not entitled to retain the amount received by them and are liable to refund the same to the Respondent. After considering the exhibits and oral evidence meticulously the Tribunal has held that the Claimants are liable to pay ₹.64,12,405/- which is rounded off to ₹.65,00,000/- to the Respondent. The Learned Tribunal has determined the liability of the Claimants to pay ₹.65,00,000/- the Respondent is a finding of fact as such the same could not be interfered by this Court.
119. ISSUE No.2, 3 and 4: The Claimants had prayed the Learned Arbitral Tribunal to declare the JOINT DEVELOPMENT AGREEMENT dated:26.05.2014 as invalid and cancel the same and also consequential reliefs. The Learned Tribunal has entertained the said prayers and also passed an order canceling the GPA/Ex.R5.
120. The Respondent is contending that the learned Tribunal has canceled Ex.R5/GPA though there was no prayer made by the claimants as such the order canceling Ex.P1/JDA and Ex.R5/GPA is not sustainable in law and facts of the case.
/66/ Com.A.P.No.98/2023
121. From the materials available on record it is evident that there is no dispute regarding execution of Ex.P1/JDA and Ex.R5/GPA by the Claimants and the Respondent. The Learned Arbitral Tribunal has come to a definite conclusion that the JDA had been expired due to non compliance of conditions by the parties as also by efflux of time and continuation of JDA serves no useful purpose. The Ex.R5/GPA was executed by the Claimants to facilitate the Respondent to execute the project. When the JDA itself is canceled by the Arbitral Tribunal by assigning proper reasons the GPA cannot survive independently. As a natural corollary the learned Arbitral Tribunal has rightly passed an order to cancel the Ex.R5/GPA also. In view of the cancellation of JDA and GPA the parties were relegated to the status they had before the execution of these documents. The Arbitral Tribunal was conscious about the payments made by the Respondent and also the expenses incurred by it. In order to restore the pre-contract status of respondent it has awarded ₹.65,00,000/-.
122. The Arbitral Tribunal has discretion to award interest pre-award stage and post award stage. The Arbitral Tribunal has observed that as neither of parties have financially benefited it has chosen not to award interest on the refund amount but restricted the period of payment for 3 months. In such circumstances the findings of the learned Arbitral Tribunal on Issue No.2, 3 and 4 calls for no interference by this Court.
/67/ Com.A.P.No.98/2023
123. The Learned Tribunal has assigned proper and convincing reasons while accepting the Claims put forth by the Claimant partially and allowing the counter claim partially.
124. The materials available on record justify the reasoning adopted and findings given on Claims of the Claimant and the Counter Claim of the Respondent by the learned Arbitral Tribunal while passing the impugned Award. The Claimants as also the respondent have failed to make out good grounds to interfere with the impugned award either to set aside the award in its entirety or to modify or to remand the case for fresh adjudication. In these circumstances POINT No.1 is answered in the NEGATIVE.
125. POINT No.2 : In view of the discussion made above and findings on Point No:1 I pass the following ORDER The petition filed by the plaintiff in Com.A.P.98/2023 (Respondent in A.C.No.178/2021) under section 34 of the Arbitration and Conciliation Act, 1996 is hereby dismissed.
The Award dated:12.06.2023 passed by the learned Arbitral Tribunal in A.C.No.178/2021 is hereby confirmed.
/68/ Com.A.P.No.98/2023 The parties are directed to bear their respective costs.
The Office is directed to return the records in A.C.No:178/2021 to the Arbitration & Conciliation Center Domestic and International, Bengaluru-1.
(Dictated to the Stenographer, transcribed and typed by her, the corrected and pronounced by me in the Open Court on this 30th day of JANURY 2024) (S.J.KRISHNA) LXXXIX ADDL.CITY CIVIL & SESSIONS JUDGE, BENGALURU.
(CCH-90)
****
Digitally signed
by S J KRISHNA
SJ Date:
KRISHNA 2024.02.09
02:02:34 -0500