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2015 DIGILAW 541 (KAR)

LGCL Properties Private Limited v. B. R. Ragamma

2015-06-01

B.V.NAGARATHNA

body2015
ORDER : B.V. Nagarathna, J. 1. This petition is filed under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act'), seeking appointment of an Arbitrator in terms of Memorandum of Understanding dated 21-6-2010, failing which a direction may be issued by this Court to appoint the second Arbitrator from the side of the respondents. Briefly stated, the facts of the case are that, the petitioner is a private limited company, registered under the provisions or the Companies Act, 1956. It is engaged in the business or development of real estate and construction of buildings in and around Bengaluru. Respondents are the absolute owners of land converted for residential purpose, originally bearing Sy. No. 25/1, admeasuring 29.5 guntas and Sy. No. 26/7, admeasuring 3.25 guntas, totally measuring 32.75 guntas, both situated at Khayamgutha Kothanoor Narayanapura Village, Krishnarajapura Hobli, Bengaluru East Taluk, Bengaluru District. 2. Respondents were desirous of developing the said lands and on holding discussions and negotiations with the petitioner, had entered into a Memorandum of Understanding dated 21-6-2010, a copy of which is produced as Annexure-A to the petition. According to the petitioner, under the said document, petitioner had paid a sum of Rs. 45.00 lakhs, under two Cheques bearing No. 000258 for Rs. 30.00 lakhs in favour of respondent 1 and another Cheque No. 000259 for Rs. 15.00 lakhs in favour of respondent 2. Both cheques dated 21-6-2010, were drawn on Kotak Mahindra Bank, Lavelle Road Branch, Bengaluru. Respondents have jointly and severally acknowledged receipt of the said cheques. It appears that, respondents had requested for an additional sum of Rs. 20.00 lakhs and accordingly, the same was also paid by the petitioner vide supplementary agreement dated 15-9-2010. The said amount was paid again by two separate cheques bearing No. 000416 for Rs. 15.00 lakhs drawn in favour of respondent 1 and Cheque No. 000417 for Rs. 5.00 lakhs drawn in favour of respondent 2, both dated 15-9-2010, drawn on Kotak Mahindra Bank, Lavelle Road Branch, Bengaluru. On receipt of the said amounts, respondents had executed a supplementary agreement dated 15-9-2010, under which they acknowledged the receipt of the additional sums. According to the petitioner-company, they have totally paid a sum of Rs. 65.00 lakhs to respondents 1 and 2. 3. On receipt of the said amounts, respondents had executed a supplementary agreement dated 15-9-2010, under which they acknowledged the receipt of the additional sums. According to the petitioner-company, they have totally paid a sum of Rs. 65.00 lakhs to respondents 1 and 2. 3. It is the case of the petitioner that, pursuant to the Memorandum of Understanding and the supplementary agreement, petitioner intended to develop the aforementioned lands and commenced work in right earnest. In that context, the petitioner requested respondents to execute and register the Joint Development Agreement and the General Power of Attorney. However, respondents failed to register the said documents despite issuance of several notices and also legal notice. It is stated that respondents executed the said documents, but have not come forward to register the same. In that context, several requests and notices were issued by the petitioner-company to the respondents, to which replies have been given by the respondents. As the respondents did not come forward to register the Joint Development Agreement as well as the General Power of Attorney despite issuance of legal notices and on receipt of untenable replies, petitioner invoked arbitration clause in the Memorandum of Understanding dated 21-6-2010 (Annexure-A). Clause 19 of the said agreement reads as under: "In the event of any dispute between the parties on any aspect arising out of this MOU, the same shall be referred to arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any amendments, modifications or enactment thereof. Each party shall be entitled to appoint one Arbitrator and the two Arbitrators in turn will appoint a third Arbitrator/Umpire. The seat of arbitration shall be Bangalore and the language of the arbitration shall be English". Invoking the said clause, petitioner issued communication dated 22-3-2014 (Annexure-D), notifying the respondents about the appointment of its Arbitrator i.e., Sri Kukkaje Ramakrishna Bhat. On receipt of the said notice (Annexure-D), respondents have not taken any step to appoint their Arbitrator. In the circumstances, petitioner has filed this petition invoking Section 11 of the Act as no action has been taken by the respondents within a period of thirty days from the date of receipt of request made by the petitioner. 4. In response to the notice issued by this Court, respondents have filed statement of objections through their Counsel. 5. In the circumstances, petitioner has filed this petition invoking Section 11 of the Act as no action has been taken by the respondents within a period of thirty days from the date of receipt of request made by the petitioner. 4. In response to the notice issued by this Court, respondents have filed statement of objections through their Counsel. 5. I have heard the learned Counsel for petitioner and learned Counsel for respondents as well as perused the material on record. 6. During the course of submission, learned Counsel for respondent has filed a memo stating that the respondents are willing to appoint an Arbitrator on their behalf and a copy of the consent issued by Smt. K. Sarojini Muthanna, a practicing Advocate and signed by her is filed. Learned Counsel for the respondents states that, this Court may appoint her as the Arbitrator on behalf of the respondents. 7. The memo is taken on record. 8. Learned Counsel for petitioner has no objection for the appointment of the Arbitrator selected by the respondents. There is also no objection raised even for appointment of Sri Kukkaje Ramakrishna Bhat as the Arbitrator appointed by the petitioner and his appointment is affirmed. 9. In the circumstances, the petitioner is disposed by holding that Smt. K. Sarojini Muthanna, Advocate is appointed as the Arbitrator on behalf of the respondents and Sri Kukkaje Ramakrishna Bhat, retired District Judge is appointed as Arbitrator on behalf of the petitioner for the purpose of adjudicating the dispute, which has arisen between the parties. The Arbitrators appointed by the petitioner and respondents in accordance with Section 11 of the Act are requested to appoint the third Arbitrator and enter upon the reference and arbitrate the dispute and to conduct the arbitration proceedings at Arbitration Centre, Kanija Bhavan, Race Course Road, Bengaluru, in terms of the Arbitration Centre - Karnataka (Domestic and International) Rules, 2012, in case the parties agree to the same.