The High Court
Case Details
- 1 - NC: 2025:KHC:23219 W.P. No.40926/2019 HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL WRIT PETITION NO.40926/2019 (GM-CPC) BETWEEN: RAJKUMAR ELANGO SON OF MR. S. ELANGO AGED ABOUT 37 YEARS R/AT:NO.126, THE RETREAT TARABANAHALLI OFF BELLARY ROAD, BANGALORE-562157. …PETITIONER Digitally signed by RUPA V Location: High Court of karnataka (BY SRI. SHRIHARI, ADV., FOR SRI. AJESH KUMAR S, ADV.,) AND: 1. MR. ARJUN ARAVINDAKSHAN S/O MR. K. ARAVINDAKSHAN AGED ABOUT 33 YEARS RESIDING AT PALM GROVE, PH-3 4TH CROSS, KORAMANGALA 6TH BLOCK BANGALORE-560095. 2. M/S. FASHNVIA RETAIL PVT LTD
Legal Reasoning
A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT NO.173 GROUND FLOOR, 3RD CROSS, 1ST MAIN ROAD KORAMANGALA 7TH BLOCK BANGALORE 560095 REP. BY ITS CHIEF EXECUTIVE OFFICER AND DIRECTOR MR. ARUN ARAVINDAKSHAN. (BY SRI. SUNIL PAUL, ADV., FOR R1 & R2 [ABSENT]) …RESPONDENTS - 2 - NC: 2025:KHC:23219 W.P. No.40926/2019 HC-KAR THIS W.P. IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT, DIRECTION OR ORDER TO QUASH THE ORDER DATED 11.07.2019 PASSED IN Com. O.S.NO.26872/2012 INTER ALIA ALLOWING THE APPLICATION DATED 30.05.2013 OF THE DEFENDANTS U/S 8 OF THE ARBITRATION AND CONCILIATION ACT, 1996 AND DISMISSING THE PLAINT AS NOT MAINTAINABLE BY THE HON'BLE COURT OF LXXXII ADDL. CITY CIVIL AND SESSIONS JUDGE, BANGALORE CITY (CCH- 83) AS PER ANNX-A. ISSUE A WRIT OF MANDAMUS OR ANY OTHER APPROPRIATE WRIT, DIRECTION OR ORDER TO DIRECT THE HON'BLE COURT OF LXXXII ADDL. CITY CIVIL AND SESSIONS JUDGE, BANGALORE CITY (CCH-83) TO EXPEDITIOUSLY DISPOSE OF THE PROCEEDINGS PENDING IN Com. O.S.NO.26872/2012, AS PER ANNX-B & ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL ORAL ORDER This petition is filed seeking for the following reliefs: i) Issue a writ of certiorari or any other appropriate writ, direction or order to quash the order dated 11.07.2019 passed in Com.O.S.No.26872/2012 inter alia allowing the application dated 30.05.2013 of the defendants under Section 8 of the Arbitration and Conciliation Act, 1996 and dismissing and plaint as not maintainable by the Hon'ble Court of LXXXII Addl. City Civil and Sessions Judge, Bangalore City (CCH No.83) as per Annexure-A. ii) Issue a writ of mandamus or any other appropriate writ, direction or order to direct the Hon'ble Court of LXXXII Addl. City Civil and Sessions Judge, - 3 - NC: 2025:KHC:23219 W.P. No.40926/2019 HC-KAR Bangalore City (CCH No.83) to expeditiously dispose of the proceedings pending in Com.O.S.No.26872/2012, as per Annexure-B. 2. Heard. 3. Sri.Shrihari, learned counsel appearing on behalf of the learned counsel Sri.Ajesh Kumar S, for the petitioner submits that the petitioner has filed commercial suit in Com.O.S.No.26872/2012. The said suit is a summary suit filed under Order XXXVII of the Code of Civil Procedure, 1908, based on the admitted e-mails of the respondents. In the said suit, the respondents entered appearance and filed an application under Order XXXVII Rule 3(5) read with Section 151 of the CPC, seeking leave of the Court to defend the said case by filing the written statement / objections. During the pendency of the said application, after adjourning the matter for more than 7 dates of hearing, both the respondents filed an application under Sections 7 and 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') read with Sections 9 and 151 of the CPC, praying to dismiss the suit on the ground that there is an arbitration clause in the shareholders agreement entered into between the petitioner - 4 - NC: 2025:KHC:23219 W.P. No.40926/2019 HC-KAR and the respondents. It is submitted that the petitioner had advanced a loan of Rs.1,33,30,000/- to the respondent No.1 and it had nothing to do with the alleged shareholders agreement executed between the petitioner and the respondent No. 1. Based on the admitted e-mails wherein the respondent No. 1 had agreed to return the money, a summary suit came to be filed. However, the Trial Court, without appreciating the fact that the application filed by the respondents seeking leave to defend was pending, allowed the application filed under Sections 7 and 8 of the Act read with Sections 9 and 151 of the CPC, on the ground that there is an arbitration clause. It is further submitted that filing an application seeking leave is as good as waiving of the right to invoke the arbitration clause and the Trial Court ought to have granted leave by allowing the application of the respondents on merits. Hence, he seeks to allow the petition. 4. 5. There is no representation for the respondents. I have heard the arguments of the learned counsel for the petitioner and perused the material available on record. - 5 - NC: 2025:KHC:23219 W.P. No.40926/2019 HC-KAR I have given my anxious consideration to the arguments advanced by the learned counsel for the petitioner. 6. The petitioner filed Com.O.S.No.26872/2012 which is a commercial suit and the said suit came to be filed under Order XXXVII of the CPC against the respondents herein seeking for a judgment and decree for a sum of Rs.1,33,30,000/- together with the interest from 01.05.2011 until payment is made. The petitioner, in paragraph 5 of the plaint made an assertion that the petitioner has paid the aforesaid amount as the loan amount through various transactions recorded in the said paragraph and the said amount is a loan given to the respondent No.1 and the respondent No.1 has admitted the said transaction in the e- mails sent to the petitioner and also agreed to re-pay the same. Hence, the suit was filed. 7. The respondents appeared in the aforesaid suit and filed an application under Order 37 Rule 3(5) read with Section 151 of the CPC, seeking leave of the Court to defend the suit by filing written statement / objections. The said application was accompanied by an affidavit. In the said affidavit, the - 6 - NC: 2025:KHC:23219 W.P. No.40926/2019 HC-KAR respondents have categorically made a statement that the amount claimed by the petitioner is not the loan amount and the petitioner is one of the Directors of the Company and there is a specific shareholders agreement entered into between them. At paragraphs 7 and 11 of the said affidavit, it is averred that if any dispute arose with regard to the shareholders agreement which is binding on the parties, the matter is required to be referred under the provisions of the Act. Admittedly, the said application was pending and on 30.05.2013, the respondents filed an application under Sections 7 and 8 of the Act read with Section 9 and 151 of the CPC, seeking for dismissal of the suit. The said application was also accompanied by an affidavit. The said affidavit indicated that both Annexures 1 and 2 are the shareholders agreement and Clause 13 speaks about the arbitration clause with regard to any dispute which is not settled pursuant to Article 37(A) of the Act shall be referred to a panel of Arbitrators which consists of one arbitrator appointed by the petitioner in party or parties to the case may be and both the Arbitrators shall appoint the presiding arbitrator and the arbitration shall be conducted in - 7 - NC: 2025:KHC:23219 W.P. No.40926/2019 HC-KAR accordance with the Indian Arbitration and Conciliation Act, 1996, as amended from time to time. 8. The Trial Court, considering the aforesaid application filed by the respondents, recorded a finding in the impugned order that the reply notice produced by the petitioner dated 14.03.2012 issued by the respondents to the notice dated 15.02.2012 of the petitioner in which the respondents have clearly stated that the petitioner was also the Director of the Company and the entire amount of Rs.1,33,30,000/- transferred by the petitioner was credited in the account of the Company and was based on a shareholders agreement. Further, the copy of another notice dated 27.03.2012 was also referred by the Trial Court. At paragraph 16, the Trial Court recorded a finding that the petitioner himself, as a party to the shareholders agreement dated 27.08.2010, 21.12.2010 and 26.03.2011 and other correspondence on record indicate that the transaction between the petitioner and the respondents is not a loan transaction as pleaded in the plaint and it was an investment and considering the clause of the shareholders agreement, allowed the application in I.A.No.III filed by the - 8 - NC: 2025:KHC:23219 W.P. No.40926/2019 HC-KAR respondents under Sections 7 and 8 of the Act read with Sections 9 and 151 of the CPC. I do not find any error or perversity in the finding recorded by the Trial Court in allowing the application. The respondents, at the initial stage, in the application filed seeking leave to defend, had taken a clear stand that the suit is not maintainable in view of the arbitration clause. Hence, the contrary contention urged by the learned counsel for the petitioner that the belated application filed by the respondents under Sections 7 and 8 of the Act read with Sections 9 and 151 of the CPC, amounts to waiver of his right, cannot be accepted and does not have any merit for consideration. 9. For the aforementioned reasons, I proceed to pass the following:
Decision
ORDER The writ petition is devoid of merits and the same is rejected. RV List No.: 1 Sl No.: 40 Sd/- (VIJAYKUMAR A. PATIL) JUDGE