The High Court · 2025

Counsel for the Respondent No.1 : PROGRESSIVE LAW FIRM Counsel for the Respondent No.2 : None Appeared The Court made the following: JUDGMENT THE HON'BLE SRIJUSTICE T. VINOD KUMAR And THE HON'BLE SMT. JUSTICE P. SREE SUDHA CIVIL MISCELLANEOUS APPEAL No.50 of 2025 JUDGMENT: (Per Hon'ble Sri Justice T.Vinod Kumar) This Civil Miscellaneous Appeal is directed against the order dt. 05.01 .2025 passed in LA. No. 589 of 2024 in O.S. No. 45 of 2024 on the hle of Senior Civil Judge, Ranga Reddy District at Kukatpally, dismissing the application filed under Section 5 r/w Section 8 of Arbitration and Conciliation Act, 1996 (for short 'the Act') r/w Section 151 of CPC seeking to refer the parties to the Arbitration.

2. The appellant herein is the petitioner in the underlying Interlocutory Application. l The case of the appellant in brief is that, theappellant is a maintenance company appointed by the Deveioper i.e. Kausalya Shelters Limitedin terms of the Registered Development Agreement-cum-General Power of Attorney (DAGPA) dt.12.01.2015 entered into by the Developer with the respondent herein. : II I 2

4. It is the further case of appellant that, respondent had invoked Clause 26 of Development Agreement providing arbitration in relation to disputes arising under the DAGpA with the developer.

5. Appellant contends that, anarbitral Tribunal was formed consisting of Justice Sri P Venkata Ram Reddi, Retired Supreme Court Judge, Justice Sri M.N Rao, Retired Chief Justice and Sri B.V Kumar (Retd. Board Member CBIC) to hear the parties.

6. The appellant contends that, in the aforesaid arbitral proceedings, the respondent herein had claimed various reliefs and one such relief sought for in paragraph 32(ix) of statement of claim filed for grant of permanent injunction restraining the appellant herein as the nominee of the developer from interl.ering with the possession ofthe respondent company's share. t

7. The appellant also contends that the respondent was aware of its obligation under Section 21 of the Telangana Apartments (Promotion of Construction and Ownership) Act, 1987, to pay maintenance, electricity charges, colpus fund, and water cess, which are not provided by the Developer gratuitously and thus, in case of default of payment of aforesaid charges, minimal 3 electricity supply is liable to be disconnected. The Respondent was informed via email dt. 16.03.2024 that separate electricity connections would be provided upon payment of dues, as per the Development and Supplementary Agreements, subject to the outcome of Arbitration Case No.1 of 2022, which in fact has been conveniently suppressed by the Respondent

8. It is further contended by the appellant that despite non- payment of aforesaid charges, excluding AC sockets, minimal electricity continues to be supplied. The respondent has not shown any intent to pay even the basic dues, as per the counter- claim filed by the Developer i.e. IWs. Kausalya Infra projects pvt Ltd. in Arbitration Case No. I of 2022: that maintenance charges claimed amounted to 76,90,24,036/- at Rs. 9.50 per sft per month for a period of 24 months from 01.02.2021 to 31.01.2023 and <4,31,40,0221- as future maintenance charges.

9. The appellant contends that the Court below failed to appreciate that, while it is an admitted fact that arbitration proceedings are going on between the respondent herein & the Developer, since the appellant is a nominee of Developer discharging the obligation of providing maintenance ought to 4 have referred the parties in the underlying lnterlocutory Application to the Arbitration by noting that, relief sought in para 32 (ix) of Claim Statement filed by the responder.rt/petitioner befole the Arbitral Tribunal and the prayer before the Civil Court are very similar in natirre, concen-ring the appellant; and that the Court below erred in dismissing the underlying Application.

10. Per contra, on behalf of the Respondent No. 1 , it is contended that the appellant hercin is neither a party to the arbitral proceedings pending nor a signatory to the DAGPA. It is contended that the Appellant/ petitioner is a 3'd party to DAGPA and is only a maintenance company appointed unilaterally by the Developer and as such is not entitled to be joined as a party to the proceedings before the Tribunal.

11. It is contented on behalf of the Respondent No.l that the appellant who is a 3'dparty to DAGPA cannot interfere with the peaceful possession of respondent/petitioner property and the same cannot be a subject matter of Arbitration.

12. It is also contended on behalf of respondent No. i that, mere mention of a unilaterally appointed company against the terms of 5 the DAGPA does not ban or bar the respondent/petitioner to file a suit for injunction against any third-party interfering with its peaceful possession and therefore the underlying petition filed by the Applicant/petitioner seeking reference to arbitration u/s. g of

13. It is contended on behalf of respondent No.l that the uniiateral appointment made by the ,'Developer" and its demand to push its subsidiary company i.e., BVM properties as a sole trustee to maintain common areas and corpus without the consent of other parties, i.e., the owners and the purchasers, not only breaches Clause 25 of DAGpA, but also is in violation of Section 23 of Contract Act 1872, and Sections 1l(a)(e), 1l(4xf), 17, 19(3) of RERA, Act 2016, and amounts to vertically integrating a subsidiary company of the developer to abuse its dominant position, which is prohibited by law.

14. It is fufther contended on behalf of Respondent No.l its request for providing separate electrical meters being ignored by the Developer, it had approached the Electrical Department fbr providing separate electrical meters, and on the same is being obstructed by the appellant, was constrained to f-rle the suit 6 against the Appellant who had disconnected the electricity and water supply which are basic amenities for enjoyment of the rights ofthe property belonging exclusively to the respondent.

15. The Respondents fufther contended that the reliefs sought for in the Suit filed by it against the Applicant herein are independent to the reliefs sought for in the arbitration proceedings as specific averments were made against the Appellant company which is interf'eling and causing disturbancc to the Respondent company. Sincc, the appellant is not a signatory to the terms of the DAGPA, the disputes are outside the ambit of the said agreement and there is no contract ot' agreement entered into by and between the appellant and respondent much less containing an arbitration clause. I{ence prayed to dismiss the Petition in raro.

16. The Respondent No.1 also contends that it cannot be said that the Respondent is parallelly prosecuting the proceedings for the reliefs against the Appellant. It is categorically submitted that no reliefs are sought against the Appellant in the Arb OP 114 of 2024 filed against the Developer U/S 9 of the Act' Therefore, it is clarified that both are under different Causes of Action. I l i l l 7

17. Basing on the material that is available on the record, the trial Courl has framed the point for consideration as under: _

18. "Whether the Petitioner/Defendant Nos.l & 2 are entitled to refer the parlies to the present suit for arbitration as prayed for."

19. Basing on the oral and documentary evidence adduced on both sides, the trial Court held that the said DAGpA was in between the plaintiff and Developer Kausalya Shelters limited. The arbitration clause exisling in the said DAGPA is binding upon the parties to the said document. Since, the parties to the present suit are different from parties to the DAGpA, the petitioner/defendant cannot press the said arbitration clause in the present suit. By observing as above, the Court below held that the appellant/petitioner. is not entitled to seek the relief in order to refer the parties to the arbitration by relying on arbitration clause in the above said DAGpA and accordingly, dismissed the underlying application.

20. Assaiting the said order, the present appeal is filed 8 2l . Heard leamed counsel for the appellant and leamed counsel for respondents through online and perused the record

22. It is pedinent to note that though Respondent No.l contended that they are unaware of the Appellant/Petitioner and aiso how it came into existence, to seek for the relief of being referred to arbitration in ongoing arbitration proceedings, a perusal of the statement of claim filed by the respondent No.1 before the Arbitral Tribunal in the dispute between the respondent herein and the developer, in Para 23,26, and Para Vl (ix) thereof, it has been stated that the appellant is a nominee company of the Developer (i.e., the Respondent in O'P. No. 1 14 of 2024). Furthermore, Respondent No.1 herein in Para 2 of O.S. No. 45 of 2024 filed by it had admitted that the Appcllant is a maintenance company appointed by the Developer. The above avernents made by Respondent No.1 clearly contradict the stand taken by them in the counter hled in the underlying application Thus, the Court is of the view that the respondent cannot be allowed to approbate and reprobate.

23. Further, as per Clause 27(e) ofthe Development Agreement- Cum-Gerrgral Power of Attorney (DAGPA) dt. 12.01.2015 t., 9 entered into between the Respondent and the Developer i.e. Kausalya Shelters Limited, the developer is obligated to maintain the complex by providing all amenities, facilities and since, the appellant being an assignee of the developer for undertaking to perform the said obligation, although the Appellant is a non- signatory to DAGPA, would be bound by the terms of DAGPA in so far as post developmcnt obligation to be performed by Developer.

24. It is furlher to be noted that the expression 'claiming through or under'as used under Sections 8 and Section 45 ofthe Act, 1996 depicts the notion of a derivative cause of action where the non-signatory steps into the shoes of a party rather than claiming an independent right under the arbitration agreement

25. The Hon'ble Supreme Courl in the case of Chloro Controls (I) P, Lt(t. vs. Severn Trent Water PuriJication Inc. and Orsrhas held that: " 167. Section 45 is a provi''ion falling under Chapter I of Parl II of the 1996 Act which is a self-contained Code. The expression 'person '(2013) I scc 641 I 10 claiming through or under' would mean and take within its ambit multiple and multi-party agreements, though in exceptional case. Even non-siqnatory parties to some of the aRreements can pray ay1! be referred to arbitration provided they satidy the pre-requisites under Seclions 14 and 45 read v,ith Schedule I. Reference ctf non- sipleltary parties is neither unknown to arbitralion iurisprudence nor is iJ impeuaissible. "

26. The Hon'ble Supreme Courl in the case of Cox and Kitrgs Ltd. vs. SAP Inttia Pvt. Lltt. antl Ors2. has held that: "45. Power of judicictl aulhority to refer parties to arbitration. - Noh4tithstanding anything contained in Part I or in thc Cotle of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized oJ an action in a maller in respect of u,hich the parties have ruade an agreenlent referred lo in Seclion 44, shall, at the reqltlllLgjktlg gf theparties or aqy person claiming tftrough or under him, refbr the es to arbitration that the said agreement is null and void. inoperative or incapable o.f being performed. In viev, of the langurige of Section 15. this Court held that the expression "any Person" re/lecls a lesislotive intent of enlarsins the scope beyond "parties" who are sisnatories to the arbitration agreement to inclu.de non-signalolig!. Howewr, the court noted that such non-signatory parties are required to claim "through or under the signdtory party-" Thus, this Court acceoted thot arbitration is possible betv,een a siPnatory to an arbitration asreement and a third parqt or non-sisnatorv claiming through!!-p941,_ 12024)4scc l ** 1\ 11

27. Further, it is to be noted that under Sections g and 11 ofthe Act, the referral Court's inquiry into whether a non-signatory is bound by the arbitration agreement is confined to a prima focie evaluation. The Courl is only required to asceftain the existence and validity of the arbitration agreement and whether there is a plausible link indicating the non-signatory,s involvement. A detailed factual and legal enquiry to extend jurisdiction to non_ signatory party, by ascertaining mutual consent, should be undertaken only by the arbitraror.

28. The Hon'ble Supreme Court in the case of Shin-Etsu Chemical Co. Ltd. v. Aksh Opti fibreihas held that: "164. In case ofjoinder oJ non-signatory parties to an arbitralion agreemenl, the following lwo scenarios will prominently emerge; first, where o signatory pdrty to an arbilrqtion agreement seeks joinder of a non-signotory party lo the arbitration agreement; and second, where o non-signotory party itseu :;eeks invocation of an arbitration agreement. In both the scenarios, the referral court will be required to prima focie Rule on the existence of the arbitarion agreement and whether the non-signotory is a veritable porty to the arbitration agreement the comolexitv of such a ln view of determination, the re.ferrul .courl should lea lhe Arbitral Tribunal t,o decide whether the non- signatorv Ddrfv is indeed a pqrty to the arbitration apreement on the basis of the factual ve it for r AIR 2oo5 sc a766 t2 evidence dnd al)Dlication of lesal doctrine. The Tribunal can delve into the factual, circumstantial, and legttl aspects of the matter to clecide whether its jurisdiction extends to the non-signatory party' In the process, the Tribunal should comply with lhe requirements of principles of natural justice such as giving opporlunity to the non- signatory to raise objections with regard to the jurisdiction of the Arbitral Tribunal This interDretalion also sives true eflbct to the doctrine of comDelence-con1petence bv leovin. the issue of delermination of true Darties to an arbitration asreement to be decided bv the Arbitral Tribu nal IInder Section 16. "

29. The doctrine of "kompetenz-kompetenz", also refer-red to as "comp6tence-compitence", or "colrpdtence de la recognized", impties that the Arbitral Tribunal is empowered and [.ras the competence to rule on its own jurisdiction, including determining all jurisdictional issues, and the existence or validity of the arbitration agreement' This doctrine is intended to minimise judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one ol the parties. (See:Uttarakhand Purv Sainik Kalyan Nigum Ltd' v. Northern Coal Fieltl Ltt)

30. In view of the complexity involved in the determination of the question as to whether the Respondent No. 2 is a party to the arbitration agreement or not, we are of the view that it would be 4AIR 2o2o sc 9?9 l I I t a 13 appropriate for the arbitral tribunal to take a call on the question after taking into consideration the evidence adduced before it by the parties and the application ofthe legal doctrine as elaborated in the decision nCox and Kings (supra).

31. The Hon'ble Supreme Court in the case of Re: Interplay Between Arbitration Agreemenls uruler the Arbitration and Conciliation Act, 1996 and the Stamp Act, 1899shas held that: i ! I I I I l "81. One of the main objectives behind the enaclment of the Arbrtra on Acl was to minimise the supervisory role of Courts in the arbitral process by confining it only to the circanstances slipulaled by the .legislature. For inslance, Section l6 of the Arbitration Act provides that the Arbitrol Tribunal may Rule on its own jurisdiction "including ruling on any objection with respect to the existence or l,alidity of the arbitration agreement". The effect of Section 16, bearing in view the principle of minimum judicial inlerferenc'e, is that judicial authorities cannol inlervene in malters dealing with the jurisdiction of the Arbitral Tribunal. Although Sections 8 and I I allow Courts to refer parties to arbitrqtton or apDoint orbitrators, Section 5 limits the Cogr{s from dealing with substontive obiections pertaining to the existence and validity of arbitration apreements at the referral or appg!41n90L$age. A Referral Court al Section 8 or Section I I stage can only enter into a prima facie determinalion. The legislative mandate of prima facie determination ensures that the Referral Courts do nol trammel the Arbitral Tribunal's authority to Rule onits own jurisdiction." ' (2024) 6 scc I I t 74

32. In view of the law as annunciated by the Apex Court, and in view of the reasons assigned above, this Court of the view that the appellant being a maintenance company/nominee of the Developer, though is not a party to the DAGpA, would be bound by the terms, of DAGpA entered into by the Developer when it comes to post development obligations. Thus, any dispute arising under DAGPA relating to post development activity can be referred to the arbitral proceedings, although the Appellant is not a signatory to the DAGpA. Since, in the present case the appellant company is involved in activities such as maintaining propefty or providing services integral to the DAGpA, the disputes arising in relation to post development could be considered as part ofthe dispute resolution process.

33. Therefore. this Court is of the considered opinion that the Court below has erred in dismissing the underlying Interlocutory application.

34. Accordingly, the C.M.A. is allowed; the order of the Court below dated 05.01.2025 passed in I.A No.589 of 2024 in O.S No.45 of 2024 is set aside and the paxties are referred to the ongoing arbitral proceedings. 15 35 Thus, the Civil Miscellaneous Appeal is allowed and No Costs. As a sequel, miscellaneous petitions pending if any shall stand closed. No order as to costs. SD'. M, RAMANA KRISHNA JOINT REGISTRAR //TRUE COPY// SECTION OFFICER To,

1. The Court of Senior Civil Judge, Ranga Reddy District at Kukatpally 2. One CC to SRl. R. ANURAG Advocate IOPUCI 3. One CC to PROGRESSIVE LAW FIRM, [OPUC] 4. Two CD Copies {r- Pcsd/gh HIGH COURT DATED:2510412025 I I I I i I JUDGMENT CMA.No.SO of 2025 o g1 -tHE {, -t 01rul 2W oA s.,,4 l[!!r ] o '+ * ALLOWING THE CIVIL MISCELLANEOUS APPEAL (A- n\ 6