MISC. Petition No. 261 of 2022 · The High Court
Case Details
- 1 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE ASHOK S.KINAGI CIVIL MISC. PETITION NO. 261 OF 2022 BETWEEN: M/S ZOLOSTAYS PROPERTY SOLUTIONS PVT. LTD. NO.1190, 22ND CROSS, HSR LAYOUT SECTOR 3, BANGALORE -560102 KARNATAKA, INDIA REPRESENTED BY ITS AUTHORIZED SIGNATORY SRI ABHISHEK KUMAR (BY SRI. ABHISHEK BAGGA, ADVOCATE FOR SRI. JIDESH KUMAR M D., ADVOCATE) AND: …PETITIONER Digitally signed by KIRAN KUMAR R Location: HIGH COURT OF KARNATAKA M/S JB CONSTRUCTION COMPANY HAVING ITS REGISTERED OFFICE AT F-271 ROAD NO.6, IPLA KOTA. RAJASTHAN REPRESENTED BY ITS AUTHORIZED PARTNER MIRZA SAGIR BEG RESIDING AT 169, ADITYA AWAS, POLICE LINE COLONY BAJRANG NAGAR, KOTA -324001 RAJASTAN. [RESPONDENT SERVED (ABSENT)] …RESPONDENT THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT 1996, READ WITH RULE 4 OF THE HIGH COURT OF KARNATAKA ARBITRATION RULES, 2001, PRAYING TO APPOINT SUCH - 2 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR ARBITRATOR(S) OR SUCH OTHER PERSON AS THIS HON’BLE COURT MAY DEEM FIT AND REFER THE DISPUTES RAISED BY THE PETITIONER FOR ADJUDICATION TO THE SAID PERSON BY WAY OF ARBITRATION IN TERMS OF THE ARBITRATION CLAUSE (11.10) OF THE AGREEMENT DATED 25.01.2018, AT ANNEXURE-B TO THIS PETITION AND GRANT SUCH OTHER RELIEF AS THIS HON’BLE COURT MAY DEEM FIT TO GRANT IN THE INTEREST OF JUSTICE AND EQUITY. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI ORAL ORDER 1. This Civil Miscellaneous petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, “the Act”), seeking for the appointment of an Arbitrator to resolve the disputes between the parties to the petition in terms of Clause 11.10 of the Services Agreement dated 25.01.2018, vide Annexure “B”. Brief facts, leading rise to the filing of this petition are as follows: The petitioner and the respondent entered into a Services Agreement dated 25.01.2018, engaging the 2. 3. - 3 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR services of the petitioner to manage the property. An agreement was executed as per Annexure “B”. The petitioner paid a total sum of ₹54,00,000/- to the respondent as interest free refundable deposit. Following the execution of the agreement, the petitioner took possession of the property and acted as a service provider on behalf of the respondent. Out of the revenue generated from the property, a portion of the money was also paid on a monthly basis to the respondent by the petitioner in terms of the agreement. The respondent agreed to refund the amount of ₹54,00,000/- to the petitioner upon handing over the possession of the property, upon completion of certain works by the petitioner in the property. However, due to the onset of the COVID pandemic, the said works were completed on 19.08.2020, and the same was communicated to the respondent by email dated 19.08.2020. Thereafter, - 4 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR the petitioner requested the respondent to refund the security deposit. 4. After repeated requests, the respondent made a payment of a sum of ₹15,00,000/- and the balance security amount stood at ₹23,75,000/-, However, after making the aforementioned payment of ₹15,00,000/-, the respondent has refused to acknowledge the balance security deposit, due to the petitioner. This has constrained the petitioner to issue a legal notice on 12.12.2020, vide Annexure “D”, calling upon the respondent to refund the balance security deposit of ₹23,75,000/-. 5. The respondent did not reply to the legal notice. The petitioner invoked the arbitration Clause as per Clause 11.10 of the Services Agreement dated 25.01.2018 by issuing a notice dated 01.02.2021 vide Annexure “E”. - 5 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR 6. The said arbitration notice was duly served on the respondent, and despite service, the respondent did not consent to the appointment of an arbitrator. Hence, this petition. 7. The notice of this petition was issued to the respondent, and despite service of notice, the respondent remained unrepresented. 8. Heard the arguments of the learned counsel for the petitioner. 9. Learned counsel for the petitioner submits that the respondent has failed to refund the security deposit amount. Hence, a dispute arose between the petitioner and the respondent regarding the payment of balance security deposit. The petitioner issued a legal notice and despite service of legal notice, the respondent did not refund the balance security deposit. He submitted that the petitioner invoked the arbitration clause by issuing a notice dated - 6 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR 01.02.2021 under Section 11 of the Act. Hence, he prays to allow the petition. 10. Perused the records, and considered the submissions
Legal Reasoning
of the learned counsel for the petitioner. 11. The point, that arises for consideration in this petition is: “Whether the petitioner has made out a ground to refer the disputes to the sole arbitrator to resolve the disputes between the parties to the petition in terms of Clause 11.10 of the Services Agreement dated 25.01.2018 as per the provisions of the Arbitration and Conciliation Act, 1996 ?” 12. There is no dispute regarding the execution of the Services Agreement between the petitioner and the respondent, and that the petitioner paid interest free refundable security deposit of ₹54,00,000/- to the respondent. As the petitioner has performed his - 7 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR obligation under the Services Agreement, and requested the respondent to refund the security deposit, the respondent has refunded a sum of Rs.15,00,000/- as a part payment towards the refund of the security deposit amount, and agreed to pay the balance security deposit of ₹23,75,000/-. However, the respondent did not repay the balance security deposit, and the petitioner got issued a legal notice to the respondent on 12.12.2020 vide Annexure “D”, calling upon him to pay the balance security deposit of ₹23,75,000/-. The respondent did not reply to the legal notice dated 12.12.2020. 13. The petitioner invoked the arbitration clause under the Services Agreement dated 25.01.2018, which reads as follows: “11.10 Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the arbitration rules of the - 8 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR Indian Council of Arbitration ("ICA") as present in force. The number of arbitrator shall be 1 (One) appointed jointly by the Parties. In the event Parties are unable to appoint the sole arbitrator within 30 (Thirty) days of a dispute being raised, the President of ICA shall appoint the sole arbitrator. The seat and venue of the arbitration proceedings shall be at Bangalore and the arbitration shall be conducted in English. Notwithstanding the foregoing, nothing precludes any Party from seeking interim equitable relief. Any arbitration award shall be final and binding on each of the Parties that were parties to the dispute.” 14. On perusal of the Services Agreement dated 25.01.2018, it is clear that if any dispute, controversy or claim arises out of the agreement that dispute has to be settled through an arbitration, having an arbitration proceedings at Bengaluru. The petitioner invoked the arbitration clause by issuing an arbitration notice on 01.02.2021. The notice proposed Mr.Anil Kumar as the sole arbitrator. - 9 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR 15. Despite the service of notice, there is no representation on behalf of the respondents. 16. Admittedly, there is an arbitration clause in the Services Agreement, and a dispute arose between the petitioner and respondent; as such, the same is to be resolved through the Arbitration. Thus, the petitioner has made out a ground to refer the dispute to arbitration. Accordingly, I answer the point for consideration in the affirmative, and proceed to pass the following order: (i) (ii)
Decision
ORDER This Civil Miscellaneous petition is allowed. Shri.S.G.Hiremath, retired Senior Civil Judge is appointed as an arbitrator to resolve the disputes between the parties to the petition as per the provisions of the Arbitration and Conciliation Act and the Rules. - 10 - NC: 2025:KHC:21063 CMP No. 261 of 2022 HC-KAR (iii) The Office is directed to communicate a copy of this order to the learned arbitrator, and the Arbitration and Conciliation Centre, Bengaluru. (iv) The petitioner has produced the original Service Agreement. In view of the same, I.A. No. 1 of 2022 does not survive for consideration, and the same is accordingly, disposed of. (v) The Office is directed to return the original documents to the petitioner after retaining a photocopy of the same. (vi) In view of the disposal of the petition, pending interlocutory applications, if any, stand disposed of. Sd/- (ASHOK S.KINAGI) JUDGE RK CT: KHV List No.: 1 Sl No.: 12