PRESENT THE HON'BLE MR. N v. ANJARIA, CHIEF JUSTICE AND THE HON'BLE
Case Details
- 1 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF APRIL, 2025 PRESENT THE HON'BLE MR. N. V. ANJARIA, CHIEF JUSTICE AND THE HON'BLE MR. JUSTICE K. V. ARAVIND COMMERCIAL APPEAL NO. 118 OF 2025 BETWEEN: 1. MRS. LEENA POL MENEZES AGED ABOUT 51 YEARS, WIFE OF MR. GERALD MENEZES, RESIDING AT G-702, SPRINGFIELD APARTMENTS, SARJAPUR ROAD, AMBALIPURA, BENGALURU - 560 102. 2. MR. GERALD ANTHONY MENEZES, AGED ABOUT 53 YEARS, SON OF MR. MENEZES, RESIDING AT G-702, SPRINGFIELD APARTMENTS, SARJAPUR ROAD, AMBALIPURA, BENGALURU - 560 102. 3. MS. MICHELLE ANOUSHKA PM, AGED ABOUT 25 YEARS, DAUGHTER OF MR. GERALD ANTHONY MENEZES, RESIDING AT No.33/4, RELIABLE RESIDENCY HARLUR ROAD BENGALURU - 560 102. Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA (BY SRI C.K. NANADAKUMAR, SENIOR ADVOCATE FOR SRI POORNACHANDRA B. PATTAR, ADVOCATE) …APPELLANTS - 2 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 AND: 1. M/S. KESHAV RAM EDUCATIONAL
Legal Reasoning
FOUNDATION TRUST A TRUST HAVING ITS REGISTERED OFFICE AT NO.3148/490/8, 491/8, F-BLOCK, SAHAKARNAGAR, BENGALURU - 560 092, REPRESENTED BY ITS TRUSTEE MS. SAMHITA GANJI. (BY SMT. JAYNA KOTHARI, SENIOR ADVOCATE FOR SMT. ARCHANA D., ADVOCATE) …RESPONDENT THIS APPEAL IS FILED UNDER SECTION 13(1-A) OF THE COMMERCIAL COURTS ACT, 2015 PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO SET-ASIDE THE IMPUGNED ORDER DATED 10.02.2025, PASSED BY THE HON'BLE COURT OF LXXXII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, AT BENGALURU (CCH-83) IN COM.A.A. NO.36/2025 (ANNEXURE-A). THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE THE CHIEF JUSTICE MR. JUSTICE N. V. ANJARIA and HON'BLE MR JUSTICE K. V. ARAVIND ORAL JUDGMENT (PER: HON'BLE THE CHIEF JUSTICE MR. JUSTICE N. V. ANJARIA) This commercial appeal arose from the judgment and order dated 10.02.2025 passed by learned LXXXII Additional City Civil and Sessions Judge, Bengaluru in Commercial Arbitration - 3 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 Application No.36 of 2025, which was an application under Section 9 of the Arbitration and Conciliation Act, 1996, filed by the respondent herein-original applicant. 2. For the reasons recorded in the judgment, the court below allowed the said application passing the following operative order, "The Application Arbitration and Conciliation Act 1996, by Applicant is allowed in part. filed under Section 9 of the The respondent is direct to open the locks on the gate of the applicant school and handed over the possession of the schedule premises. take necessary help The applicant from jurisdictional police to protect the applicant school from the respondents and their agents any body else, acting at their behest. The respondents and their agents any body else, acting at their behest are restrained from the interference with peaceful possession of applicant." 3. When the present appeal came up today for consideration before the court, it was found that the very substratum of the order had ceased to exist for any effective adjudication, for, it was jointly stated by learned Senior Advocate Mr. C.K. Nandakumar assisted by learned advocate Mr. Poornachandra B. Pattar for the appellants and learned Senior Advocate Smt. Jayna Kothari for - 4 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 learned advocate Smt. D. Archana for the respondent that the respondent-M/s. Keshav Ram Educational Foundation Trust, which runs the school had already taken the possession of the subject matter premises. 3.1 The school premises is given on lease to the respondent- Trust by the appellants herein as per the lease deed dated 16.04.2024. As the possession is already with the respondent, no further order was required to be passed. 3.2 However, the Court suggested to the parties that the disputes between them could be immediately addressed and process of resolution could be started if they agree to appoint an Arbitrator which was till date not appointed nor any action in that regard was initiated by either side. 3.3 When the appeal came up for consideration today, responding positively, a joint memo dated 07.04.2025 filed by both learned advocates for the parties was tendered in which it was stated that the appellants and the respondent have agreed to appoint Mr. Justice John Michael Cunha, a retired Judge of this High Court as Arbitrator. The memo is taken on record. - 5 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 3.4 In view of the provisions of Section 11(2) of the Act of 1996 which provides that the parties are free to agree on a procedure for appointing the arbitrator or arbitrators, the request of the parties jointly made to appoint the sole Arbitrator is accepted. 3.5 The court appoints Mr. Justice John Michael Cunha, a retired Judge of the High Court as Arbitrator to arbitrate the dispute of the parties and to give his award. 3.6 While the parties are being relegated to arbitral process before the sole Arbitrator as appointed as per agreement between them, certain points or differences in the nature of disputes cropped up in course of the hearing of the present appeal. 4. Learned Senior Advocate for the appellants submitted that lease deed dated 16.04.2024 which defines the relationship of lessor and lessee between the parties is an unregistered document and that stamp duty is not paid on the said document. In this regard, he invited attention of the court to paragraph 23 in the Lease Agreement dealing with the Registration in which paragraph 23.1 mentions that, "The Parties shall arrange for registration of this Lease Deed in the offices of the jurisdictional sub-registrar of land and assurances. The stamp duty and registration fee payable - 6 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 for stamping and registration of the Lease Deed shall be borne by the Lessee". 4.1 It was submitted that the respondent is duty-bound to pay the stamp duty to cure the said defect. As against this submission, stand of the respondent was that as per the decision of the Hon'ble Supreme Court in Interplay Between Arbitration Agreements Under Arbitration And Conciliation Act, 1996 And Stamp Act, 1899, in RE [(2024) 6 SCC 1], as observed in the conclusion, paragraph 235.2, the non-stamping or inadequate stamping is a curable defect. 4.2 It was highlighted from paragraph 235.3 that "An objection as to the stamping does not fall for determination under Sections 8 or 11 of the Arbitration Act. The court concerned must examine whether the arbitration agreement prima facie exists". It was therefore submitted that the question of payment of stamp duty or deficit stamp duty is a dispute to be dealt with by the Arbitrator. 4.3 Learned Senior Advocate stated before the Court that in this regard whatever the Arbitrator decides, the same will be abided by. - 7 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 5. The second area of dispute which was required to be addressed and dealt with, at this stage, is about the liability of the respondent to pay the rentals and the actual rent amount paid to the appellants-lessor. As regards this liability, learned Senior Advocate for the respondent tendered a memo-cum-statement of calculation dated 07.04.2025, in which month-wise details starting from April 2024 showing the rent amounts due and the rent amount paid till April 2025 are indicated. It was claimed on behalf of the respondent that the total rent amount due till April 2025 was Rs.27,50,000/- whereas the total rent paid till date amounts to Rs.22,00,000/-. The balance rent amount due is shown as Rs.5,50,000/-. 5.1 Learned Senior Advocate for the respondent stated before the court that the respondent is ready to pay the said amount to the appellants and that the same shall be paid within two weeks from today. 5.2 With regard to the liability and the total amount payable towards the rent, the case of the appellants is that, for some months including the month of October 2024 and November 2024, no amount paid towards rent. Similarly, no payment is indicated in - 8 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 respect of earlier months of April 2024 and July 2024. In the same statement given by the respondent, for the month of December 2024, amount of Rs.1,00,000/- instead of Rs.3,00,000/- is shown to have been paid. There also appears to be dispute as to whether the monthly rent payable is Rs.3,00,000/- or Rs.2,50,000/-. Be that as it may. 6. In the light of the above facts and circumstances obtaining and the dispute on the aforesaid two counts having been raised before the court, the following directions are issued, (i) The jointly appointed sole Arbitrator Mr. Justice John Michael Cunha, a former Judge of this High Court shall commence the Arbitration proceedings between the parties, without booking delay. The parties shall co-operate. (ii) While dealing with the arbitral disputes between the parties, the sole Arbitrator shall first advert to and decide about the aspects of non-registration of the lease deed and non-payment of stamp duty to the lease agreement between the parties which is subject matter of the dispute. - 9 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 (iii) Once the Arbitrator rules on the said aspects of registration and payability of stamp duty are decided, the respondent shall respect and abide by the same. (iv) The decision on the aforesaid issue shall be taken after hearing both the sides so as to complete the exercise within six weeks from the date of receipt of this order. (v) Since there is a dispute about the liability of payment of rent, in addition to Rs.5,50,000/- which will be paid to the appellants within two weeks from today, as per the statement made by learned Senior Advocate for the respondent, the respondent shall deposit further amount of Rs.7,50,000/- to be adjusted towards rent liability for future, to be kept as deposit which shall be guided for their disposal by final outcome and will remain subject to the outcome of the arbitration proceedings. (vi) During the arbitral proceedings, the respondent shall continue to pay the rent of 2,50,000/- every month. This amount is not indicative of the actual determination of extent of rent payable by the lessee which is again an arbitrable dispute to be decided by the Arbitrator. - 10 - NC: 2025:KHC:14740-DB COMAP No. 118 of 2025 (vii) The amount of Rs.7,50,000/- shall be treated as amount deposited to be adjusted towards rent which shall be finally decided by the Arbitrator in respect of the differential amount of the rent. 6.1 Both learned Senior Advocates submit that it may be provided that the arbitration between the parties may take place at Bengaluru Arbitration Centre. It is, therefore, observed and provided that the arbitration shall take place at Bengaluru Arbitration Centre. 7.
Decision
The present appeal is accordingly disposed of in terms of the above order. Sd/- (N. V. ANJARIA) CHIEF JUSTICE Sd/- (K. V. ARAVIND) JUDGE DDU List No.: 1 Sl No.: 1