MISC. Petition No. 218 of 2023 · The High Court
Case Details
- 1 - NC: 2025:KHC:5655 CMP No. 218 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM CIVIL MISC. PETITION NO. 218 OF 2023 BETWEEN: M/S BLUE VALLEY URBAN INFRATECH PRIVATE LIMITED A COMPANY REGISTERED UNDER COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT NO.41, BLUE VALLEY CELESTIAL NANDIDURGA MAIN ROAD, JAYAMAHAL EXTENSION, BANGALORE - 560046 REPRESENTED BY ITS MANAGING DIRECTOR MR. K. SURYANARAYANA RAJU (BY SRI. SAMPATH BAPAT, ADVOCATE FOR SRI. SRINATH, ADVOCATE) …PETITIONER Digitally signed by NANDINI MS Location: HIGH COURT OF KARNATAKA AND:
Legal Reasoning
1. SRI. N. MUNINDRA S/O LATE SRI. C. NANJUNDAPPA, SINCE DEAD REP. BY HIS LEGAL REPRESENTATIVES 2. SMT. H.N. MANJULA W/O SRI. N. MUNINDRA AGED 61 YEARS 3. SMT. DHANALAKSHMI D/O SRI. N. MUNINDRA AGED 42 YEARS 4. M. DORAISWAMY, S/O SRI. N. MUNINDRA, - 2 - NC: 2025:KHC:5655 CMP No. 218 of 2023 AGED ABOUT 41 YEARS, 5. SMT. M. VANISHREE D/O SRI. N. MUNINDRA, AGED 41 YEARS ALL ARE R/AT NO.4/44, 5TH MAIN, 1ST CROSS, MANJUNATHA LAYOUT, NEAR MAMATHA HIGH SCHOOL, R.T.NAGAR POST, BANGALORE - 560032. (R1 IS DEAD AND R2 TO R5 ARE TREATED AS LEGAL REPRESENTATIVE'S OF R1) …RESPONDENTS (BY SRI. ANIL KUMAR R., ADVOCATE FOR R2 TO R5 V/O DATED 04.11.2024 R1 DECEASED AND R2 TO R5 ARE LEGAL REPRESENTATIVES OF DECEASED R1) THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11 (5) AND (6) OF THE ARBITRATION AND CONCILIATION ACT, 1996, PRAYING TO 1. APPOINT A SOLE ARBITRATOR TO ADJUDICATE UPON ALL THE DISPUTES ARISING BETWEEN THE PETITIONER AND THE RESPONDENT FROM AND OUT OF THE MEMORANDUM OF UNDERSTANDING DATED 17.04.2015 (ANNEXURE A), AS PER CLAUSE 11 IN PAGE NO. 18 OF THE MEMORANDUM OF UNDERSTANDING DATED 17.04.2015 (ANNEXURE A). 2. PASS SUCH OTHER ORDER OR ORDERS AS THIS HON'BLE COURT MAY DEEM FIT, PROPER, NECESSARY AND EXPEDIENT IN THE CIRCUMSTANCES OF THE CASE. THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM - 3 - NC: 2025:KHC:5655 CMP No. 218 of 2023 ORAL ORDER This Civil Miscellaneous Petition is filed by the petitioner under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking appointment of sole Arbitrator to resolve the dispute and difference between the parties in terms of Joint Development Agreement dated 17.04.2015 evidenced at Annexure-A. 2. After issuance of notice, the respondents have tendered appearance through learned counsel. 3. The petitioner is before this Court on the strength of memorandum of understanding entered into between the petitioner and respondent. The petitioner a developer has entered into joint development agreement with the respondent. The petitioner issued a notice on 05.03.2021 calling upon the respondents to repay the investment made by the petitioner on the ground that the respondent has failed to hand over possession of land. Since there was no response, the petitioner has invoked - 4 - NC: 2025:KHC:5655 CMP No. 218 of 2023 clause 11 of the joint development agreement and in the said notice evidenced at Annexure-F, the petitioner has called upon the respondent to nominate the sole arbitrator as per memorandum of understanding. 4. The respondent in the captioned petition acknowledge the existence of arbitration clause. However, on contrary claims that he has suffered loss as the petitioner has not complied the terms of memorandum of understanding. 5. On closer examination of the annexurers annexed to Civil Miscellaneous Petition and the documents placed on record more particularly the arbitration clause provided under the memorandum of understanding, there appears to be anomaly as the parties have reserved right to appoint one arbitrator. The existence of the arbitration clause is undisputed. However, the right reserved by each party to independently appoint a sole arbitrator is clearly contrary to Section 10 of the Act. This issue has been effectively addressed by the Hon'ble Apex Court in Shin - 5 - NC: 2025:KHC:5655 CMP No. 218 of 2023 Satellite Public Co. Ltd. v. Jain Studios Ltd., (2006) 2 SCC 628.wherein at paragraph No.27 it is held as under: "27. The proper test for deciding validity or otherwise of an agreement or order is “substantial severability” and not “textual divisibility”. It is the duty of the court to sever and separate trivial or technical parts by retaining the main or substantial part and by giving effect to the latter if it is legal, lawful and otherwise enforceable. In such cases, the court must consider the question whether the parties could have agreed on the valid terms of the agreement had they known that the other terms were invalid or unlawful. If the answer to the said question is in the affirmative, the doctrine of severability would apply and the valid terms of the agreement could be enforced, ignoring invalid terms. To hold otherwise would be “to expose the covenanter to the almost inevitable risk of litigation which in nine cases out of ten he is very ill-able to afford, should he venture to act upon his own opinion as to how far the restraint upon him would be held by the court to be reasonable, while it may give the covenantee the full benefit of unreasonable provisions if the covenanter is unable to face litigation”. 6. While the existence of arbitration clause stands substantiated by the petitioner more particularly when respondents acknowledge the existence of arbitration - 6 - NC: 2025:KHC:5655 CMP No. 218 of 2023 clause, this Court is of the view that the petitioner has satisfied the requirements provided under Section 11(4) of the Act. 7. This Court is empowered under Section 10 of the Act to appoint a sole arbitrator as there is anomaly in the arbitration clause. Therefore, this Court proceeds to pass the following :-
Decision
ORDER (i) Civil Miscellaneous Petition is allowed appointing Sri V.V. Angadi, Former District & Sessions Judge, as the sole Arbitrator to enter reference of the disputes between the petitioner and the respondents and conduct proceeding at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules governing the said Arbitration Centre; (ii) All contentions inter se parties are left open for adjudication in the arbitration proceedings; (iii) Office is directed to communicate this order to the Arbitration and Conciliation Centre and to Sri V.V. Angadi, Former District & - 7 - NC: 2025:KHC:5655 CMP No. 218 of 2023 Sessions Judge, as required under the Arbitration and Conciliation Centre Rules, 2012; (iv) Registry is directed to forthwith return the original agreement of sale furnished along with this petition after obtaining Photostat copy of the same. Sd/- (SACHIN SHANKAR MAGADUM) JUDGE NMS