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2025 DIGILAW 1877 (TS)

Kalyan Constructions v. Madhubasi Vijaya Saradhi

2025-12-19

K.LAKSHMAN

body2025
ORDER : K. Lakshman, J. Heard Mr. K. Ujwal Babu, learned counsel representing Mr. Madiraju Prabhakar Rao, learned counsel for the applicant and Mr. Mr. K. Mohan, learned counsel for the respondent Nos.1 to 4 and 7. Despite service of notice, none appeared for respondent No.5. It is brought to the notice of this Court that respondent No.6 is no more. 2. The present Arbitration Application is filed under Section- 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the Act, 1996’) for appointment of an arbitrator to resolve the disputes between the parties. 3. CONTENTIONS OF THE APPLICANT i) Applicant is in the real-estate business at Hyderabad and other places. ii) Respondent Nos.1 and 2 approached the applicant and informed it that they are the absolute owners and possessors of Plot bearing Nos.47 and 48, admeasuring 300 square yards each, making a total extent of 600 square yards in Survey Nos.13 and 14, situated at Ammuguda Village, Valluvar Nagar under Kapra Municipality, Malkajgiri Mandal, presently Medchal – Malkajgiri District by virtue of two registered sale deeds bearing document Nos.5710 and 5711 of 1998, both dated 09.12.1998. iii) Respondent Nos.1 and 2 approached the applicant in the month of September, 2008 with a proposal to develop the said open plots for construction of residential complex for mutual benefit of both the parties. Accordingly, they have entered into a Development Agreement-cum-General Power of Attorney (DAGPA) bearing document No.4610 of 2008, dated 08.09.2008 in respect of the aforesaid plots. As per the recitals of the said DAGPA, the applicant has to construct entire complex with his own funds and the sharing ratio of super built-up area shall be 50% to respondent Nos.1 and 2 and remaining 50% built up area to the applicant. Accordingly, the applicant spent huge amount to the extent of Rs.6.00 lakhs for development of the said land in the year 2008-09. iv) As per the terms of DAGP, respondent Nos.1 and 2 declared themselves as absolute owners of the aforesaid lands and it is free from all encumbrances, attachments, disputes and claims from third parties. If any disputes arose at the time of construction, respondent Nos.1 and 2 agreed to indemnify the applicant. Respondent Nos.1 and 2 have handed over the peaceful possession of the subject land to the application. v) At the time of development work on the subject land, one Mrs. If any disputes arose at the time of construction, respondent Nos.1 and 2 agreed to indemnify the applicant. Respondent Nos.1 and 2 have handed over the peaceful possession of the subject land to the application. v) At the time of development work on the subject land, one Mrs. K.H. Sukanya tried to interfere with the construction and filed a suit in O.S. No.1744 of 2009 seeking perpetual injunction against the applicant and respondent Nos.1 and 2, wherein she had obtained interim injunction initially. However, the said suit was dismissed for default on 24.09.2019 by learned Principal Senior Civil Judge, Rangareddy District at L.B.Nagar. Thereafter, she filed an application for restoration of the said suit along with delay petition and the same are pending. vi) Respondent Nos.1 and 2 also filed a suit in O.S. No.832 of 2011 against the said K.H. Sukanya for declaration and recovery of possession in respect of the subject land and the same was decreed ex parte on 17.10.2014. The said K.H. Sukanya filed I.A. No.375 of 2016 to condone the delay of 417 days in filing petition to set aside the ex parte decree dated 17.10.2014 and the same was allowed on 28.04.2017 by learned XVI Additional District and Sessions Judge, Malkajgiri. Aggrieved by the said order, respondent Nos.1 and 2 filed C.R.P. and later carried the matter to the Hon’ble Supreme Court vide SLP, which is pending. vii) Respondent Nos.1 and 2 also filed O.S. No.68 of 2018 for perpetual injunction against the applicant and the same was dismissed for default on 21.10.2021 by learned Additional Junior Civil Judge, Malkajgiri. viii) The applicant also filed O.S. No.255 of 2019 for perpetual injunction against respondent Nos.1 and 2, wherein I.A. No.3800 of 2018 filed by respondent Nos.1 and 2 herein to reject the plaint, was allowed vide order dated 13.02.2020 by learned I Additional Junior Civil Judge and granting liberty to the applicant to invoke arbitration clause. ix) The said DAGPA dated 08.09.2008 also contains an arbitration clause to the effect that in case of any dispute arises between the parties, the matter shall be referred to the Arbitrator, one chose by each party and in case of any difference of opinion between such Arbitrators, they shall nominate a common Umpire and their award shall be final and binding on them. x) Respondent Nos.1 and 2 suppressing the aforesaid DAGPA, pendency of the aforesaid suits and interim orders therein, have entered into another Development Agreement bearing document No.1874 of 2019 dated 19.12.2018 with M/s. S.R. Constructions, respondent No.3 herein in respect of the subject land. xi) The applicant filed Arbitration O.P. No.4 of 2020 under Section - 9 of the Arbitration and Conciliation Act against respondent Nos.1 to 3, seeking perpetual injunction along with I.A. No.539 of 2020 and the same was dismissed for default on 14.02.2013. xii) Respondent Nos.1 and 2 also executed two registered sale deeds in favour of respondent Nos.4 to 7 vide document bearing Nos.2001 and 2002 of 2021, dated 22.02.2021 which is in violation of the orders passed by the Court. On account of the said attitude of respondent Nos.1 and 2, the applicant is not in a position to perform his contractual obligation without any fault on his part. xiii) The applicant has already issued notice dated 23.12.2021 calling upon the respondents to resolve the disputes and nominated Mr.S. Keshava Rao, Senior Advocate, as an Arbitrator for adjudicating the dispute. The respondents failed to respond to the said legal notice. Hence, the applicant filed the present arbitration application. CONTENTIONS OF THE RESPONDENTS 4. Respondent Nos.1 and 2 filed counter denying the claim of the applicant contending as follows: i) The DAGPA dated 08.09.2008 was cancelled and the amount of Rs.5.00 lakhs paid as an advance was also refunded to the applicant on 13.10.2010. The applicant suppressed the said fact taking advantage of non-registration of cancellation deed and falsely claiming that the Development Agreement is in existence. ii) The applicant did not take steps in accordance with the Arbitration Clause and the notice issued by it on 23.12.2021 is also contrary to the agreement. iii) The applicant has not filed any document to show that the Firm is a registered one. As per Section - 69 of the Partnership Act, the applicant can neither sue nor be sued. 5. Respondent No.3 filed counter vehemently opposing the application contending as follows: i) The suit filed by the applicant in O.S. No.255 of 2019 was rejected on 13.02.2020. After elapse of about four years, the applicant filed the present application. Therefore, the same is hopelessly time barred. 5. Respondent No.3 filed counter vehemently opposing the application contending as follows: i) The suit filed by the applicant in O.S. No.255 of 2019 was rejected on 13.02.2020. After elapse of about four years, the applicant filed the present application. Therefore, the same is hopelessly time barred. ii) The DAGPA dated 08.09.2008 was cancelled and the applicant had received the amount of Rs.5.00 lakhs and acknowledged the same for cancellation. Since respondent Nos.1 and 2 were residing in USA, cancellation deed was not executed. iii) Respondent No.3 after due diligence, entered into a Development Agreement dated 19.12.2018 with respondent Nos.1 and 2. iv) After entering into the said development agreement, respondent No.3 had obtained sanction in the year 2019 and constructed ground plus five floors and completed the construction by January, 2021. All the units were sold to third parties including respondent Nos.4 to 7. In view of the same, nothing survives in the DAGPA dated 08.09.2008. 6. ANALYSIS AND FINDING OF THE COURT i) The undisputed facts are that the applicant entered into DAGPA dated 08.09.2008 with respondent Nos.1 and 2 for development of the subject land. There is also an arbitration clause in the said DAGPA in the manner mentioned above. There are also cases and counter cases filed against each other and also third party. ii) The main contention of applicant is that the said DAGPA dated 08.09.2008 is subsisting, whereas the same is disputed by respondent Nos.1 to 3. It is also contended by respondent Nos.1 to 3 that the said DAGPA dated 08.09.2008 was cancelled, the applicant had received an amount of Rs.5.00 lakhs from respondent Nos.1 and 2 and also executed a receipt dated 13.10.2010. Since respondent Nos.1 and 2 were residing in USA, cancellation deed could not be executed. Taking advantage of the same, the applicant filed the present application. With regard to receipt of the amount of Rs.5.00 lakhs by the applicant from respondent Nos.1 and 2, they have filed receipt dated 13.10.2010. The applicant did not deny the same by filing rejoinder to the counter filed by respondent Nos.1 and 2. In view of the same, it can be presumed that the applicant must have received the said amount of Rs.5.00 lakhs towards refund of amount paid by the applicant under DAGPA. When the amount is received by the applicant, it cannot be said that DAGPA is in existence. In view of the same, it can be presumed that the applicant must have received the said amount of Rs.5.00 lakhs towards refund of amount paid by the applicant under DAGPA. When the amount is received by the applicant, it cannot be said that DAGPA is in existence. iii) Even otherwise, the said DAGPA is dated 08.09.2008. As per one of the clauses of the said DAGPA, the applicant shall complete the construction within 18 months from the date of getting permission from GHMC and three months grace period was given. Thus, in all, the applicant has to complete the construction within 21 months. If the construction is not completed within 21 months, the applicant is liable to pay Rs.3/- per square feet as rent per month to respondent Nos.1 and 2 for a maximum period of three months thereafter. There is no whisper in the application as to when the applicant obtained the building permission except mentioning that it has started construction work, but due to filing of the aforesaid civil cases, he could not complete the same. But it cannot be a ground to seek appointment of arbitrator for the reason that there is a long delay. Further, vide order dated 13.02.2020, the suit filed by the applicant in O.S. No.255 of 2019 was rejected on the application filed by respondent Nos.1 and 2 in I.A. No.3800 of 2019 under Section - 8 of the Arbitration and Conciliation Act, granting liberty to the applicant to invoke the arbitration clause for adjudication of dispute. Even the said suit was also filed by the applicant in the year 2019. The applicant’s contention that pending civil suits prevented performance does not save limitation. iv) It is apt to note that the said I.A.No.3800 of 2019 in O.S.No.255 of 2019 was allowed and plaint was rejected on 13.02.2020, the applicant filed the present application only on 04.10.2024 i.e. after 3½ years. In the light of the same, it is clear that there is long delay in filing the present application. v). In this case, as stated supra, once the applicant accepted refund, no arbitrable dispute survived. After termination of the applicant’s agreement, respondent Nos.2 and 3 entered into a fresh development agreement with respondent No.3, who obtained municipal permission, completed construction and sold flats to the prospective purchasers. v). In this case, as stated supra, once the applicant accepted refund, no arbitrable dispute survived. After termination of the applicant’s agreement, respondent Nos.2 and 3 entered into a fresh development agreement with respondent No.3, who obtained municipal permission, completed construction and sold flats to the prospective purchasers. Such conduct on the part of the applicant clearly attracts the doctrines of waiver, acquiescence, and laches, disentitling the applicant from invoking arbitration at this belated stage as held by the Hon’ble Supreme Court in BSNL v. Nortel Networks India Pvt. Ltd., (2021) 5 SCC 738 vi) Relevant paragraph Nos.38, 39 and 40 of the said judgment are as follows: “Applying the law to the facts of the present case, it is clear that this is a case where the claims are ex facie time barred by over 5 ½ years, since Nortel did not take any action whatsoever after the rejection of its claim by BSNL on 04.08.2014. The notice of arbitration was invoked on 29.04.2020. There is not even an averment either in the notice of arbitration, or the petition filed under Section 11, or before this Court, of any intervening facts which may have occurred, which would extend the period of limitation falling within Sections 5 to 20 of the Limitation Act. Unless, there is a pleaded case specifically adverting to the applicable Section, and how it extends the limitation from the date on which the cause of action originally arose, there can be no basis to save the time of limitation. 39. The present case is a case of deadwood / no subsisting dispute since the cause of action arose on 04.08.2014, when the claims made by Nortel were rejected by BSNL. The Respondent has not stated any event which would extend the period of limitation, which commenced as per Article 55 of the Schedule of the Limitation Act (which provides the limitation for cases pertaining to breach of contract) immediately after the rejection of the Final Bill by making deductions. The Respondent has not stated any event which would extend the period of limitation, which commenced as per Article 55 of the Schedule of the Limitation Act (which provides the limitation for cases pertaining to breach of contract) immediately after the rejection of the Final Bill by making deductions. In the notice invoking arbitration dated 29.04.2020, it has been averred that: “ Various communications have been exchanged between the Petitioner and the Respondents ever since and a dispute has arisen between the Petitioner and the Respondents, regarding non payment of the amounts due under the Tender Document.” The period of limitation for issuing notice of arbitration would not get extended by mere exchange of letters, or mere settlement discussions, where a final bill is rejected by making deductions or otherwise. Sections 5 to 20 of the Limitation Act do not exclude the time taken on account of settlement discussions. Section 9 of the Limitation Act makes it clear that “where once the time has begun to run, no subsequent disability or inability to institute a suit or make an application stops it.” There must be a clear notice invoking arbitration setting out the “particular dispute” (including claims / amounts) which must be received by the other party within a period of 3 years from the rejection of a final bill, failing which, the time bar would prevail. In the present case, the notice invoking arbitration was issued 5 ½ years after rejection of the claims on 04.08.2014. Consequently, the notice invoking arbitration is ex facie time barred, and the disputes between the parties cannot be referred to arbitration in the facts of this case.” vii) Referring to the aforesaid decision and also Vidya Drolia v. Durga Trading Corporation , (2021) 2 SCC 1 , the Apex Court in NTPC Limited v. M/s. SPML Infra Limited , (2023) 9 SCC 385 , discussed the scope of Section - 11 of the Arbitration and Conciliation Act, 1996 and held that the Court can trim of the dead wood in the primary stage of the case. 7. It is also relevant to note that respondent Nos.4 to 7 are not parties to the agreement. 8. 7. It is also relevant to note that respondent Nos.4 to 7 are not parties to the agreement. 8. Arbitration clause mentioned in the DAGPA dated 08.09.2008 is extracted below:- “In case of any dispute arises between hereto touching these presents, the matter shall be referred to the arbitrators one chosen by each party and in case of any difference of opinion between such arbitrators, they shall nominate a common umpire and their award shall be final and binding on both the parties and the relevant provisions of the Arbitration Act shall apply.” 9. Applicant is aware that respondent Nos.1 and 2 are residing in USA. Even then, it has issued notice dated 23.12.2021 by sending the same to Neredmet, Hyderabad address. It has not filed proof of service of the same on respondent Nos.1 and 2. Thus, according to respondent Nos.1 and 2, applicant has not issued notice in terms of Section 11 of the Act, 1996. There is a specific pleading in paragraph No.18 of the counter filed by them. Even then, applicant did not file reply/rejoinder adverting to the same. 10. It is also apt to note that notice dated 14.05.2023 was sent to Sri S.Keshava Rao, Advocate, named arbitrator of the Applicant. Copies were marked to respondent Nos.1 and 2 and the same were sent to the said Neredmet, Hyderabad address of respondent Nos.1 and 2. The same were returned unserved with an endorsement ‘no such person’. Thus, the said notices are defective. 11. Viewed from any angle, this application is liable to be dismissed CONCLUSION 12. i) In view f the aforesaid discussion, this Court is of the opinion that the present arbitration application is hopelessly barred by limitation and, therefore, the applicant is not entitled to invoke arbitration clause for an appointment Arbitrator to resolve the issues after lapse of about fourteen (14) years. 12. ii) The present Arbitration Application is liable to be dismissed and the same is accordingly dismissed. In the circumstances of the case, there shall be no order as to costs. As a sequel thereto, miscellaneous applications, if any, pending in the Arbitration Application shall stand closed.