THE KARNATAKA TELECOM DEPARTMENT EMPLOYEES CO OPERATIVE SOCIETY LTD v. M/S YASH

Judgment

1. This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator to resolve the dispute between the parties to the petition in terms of clause 25 of the Memorandum of Agreement (hereinafter referred to as ‘MOU’ for short) for Residential Layout Turnkey Project dated 07.01.2009 vide Annexure-A.

2. Brief facts, leading rise to the filing of this Civil Miscellaneous Petition are as follows:

3. The petitioner and respondents have entered into a Memorandum of understanding with the petitioner- society on 07.01.2009 to procure the lands adjoining to Huyilalu and Megalapura villages, Ilavala Hobli, Mysore Taluk for the formation of residential layout of - 4 - NC: 2026:KHC:5412 CMP No. 697 of 2022 HC-KAR the said land which may be procured and purchased by the respondents at the investment of the petitioner's society, enable the petitioner's society to allot such sites to its members and accordingly, to procure the said lands more or less 50 acres in and around the said villages by the respondents, the petitioner society paid ₹4,55,00,000/- to the respondents, as and when the respondents demanded the money. The petitioner society has paid the said amount, but out of the said proposed lands, the respondents have only entrusted the said lands worth for a sum of ₹ 1,25,00,000/- and fell due sum of ₹ 3,30,00,000/- towards the worth of the remaining land. In spite of the repeated requests and demands made by the petitioner society, the respondents did not wake up from their deep sleep and neglected in procuring the lands, and entrusting the lands to the petitioner society.

4. On 15.07.2020, the petitioner issued a legal notice to the respondents demanding them to pay the principal - 5 - NC: 2026:KHC:5412 CMP No. 697 of 2022 HC-KAR and interest and as well as to give a consent for the appointment of an arbitrator.

5. Though notice was served, the respondents, did not reply to the petitioner’s request. On 15.03.2021, a legal notice was issued, but the respondents have deliberately avoided the service of notice of the petitioner. Final notice was issued on 16.12.2021 invoking sub clause for the appointment of the arbitrator. However, the respondents did not comply with the petitioner’s demand. It is contended that the dispute arose between the petitioner and respondents and the dispute has to be resolved through an arbitration as there is an arbitration agreement. Hence, this petition.

6. The respondents filed a statement of objections contending that the petitioner’s reply notice dated

02.01.2014 to the legal notice dated 16.12.2013 clearly shows that the claim of the petitioner arose on

02.01.2014 wherein MOU dated 07.01.2009 was - 6 - NC: 2026:KHC:5412 CMP No. 697 of 2022 HC-KAR terminated. However, the petitioner has initiated arbitration proceedings for recovery of the amount as claimed under the notice dated 02.01.2014 along with interest by way of issuing a legal notice dated

15.07.2020 i.e., after a lapse of 6 years from the date on which the claim arose. Therefore, the petitioner is seeking initiation of arbitration proceedings with respect to the time barred claim. Hence, prays to dismiss the petition.

7. Heard the arguments of Sri. D.R. Ravishankar learned senior counsel petitioner and Sri. Krishnamurthy, learned senior counsel respondents.

8. The learned senior counsel for the petitioner submits that the petitioner and respondents have entered into a memorandum of agreement for residential layout turnkey project and the respondents have committed a breach of terms and conditions of the MOU. He submits that the petitioner issued a demand notice to - 7 - NC: 2026:KHC:5412 CMP No. 697 of 2022 HC-KAR the respondents. The respondents have replied, but did not repay the amount. The petitioner invoked an arbitration clause by issuing an arbitration notice, and the respondents replied to the arbitration notice, on untenable grounds.

9. Although the respondents have contended that the claim made by the petitioner is barred by limitation, he submits that the said aspect cannot be considered while deciding a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 and to buttress his arguments, he has placed reliance on the judgment of Hon’ble Apex Court in the case of Uttrakhand Purva Sainik Kalyana Nigama Ltd. v. Northern Coal Field Ltd.1; Aslam Ismail Khan Deshmuk v. ASAP Fluids Private Limited and another2 and Hindustan Petroleum Corporation Ltd. v. BCL ORDER i. The Civil Miscellaneous Petition allowed. ii. Hon’ble Sri. Justice Sreenivas Harish Kumar, Former Judge, High Court of Karnataka, is nominated as an arbitrator resolve the dispute between petitioner respondents as per the provisions of Arbitration and Conciliation Act, 1996 and Rules. iii. The Registry is directed to forward the copy of this order to the learned arbitrator and the Director of the Arbitration and Conciliation Centre, Bengaluru. iv. All the contentions of the parties are kept open, including limitation. - 18 - NC: 2026:KHC:5412 CMP No. 697 of 2022 v. Pending IA(s), if any, shall stand disposed of. Sd/- (ASHOK S.KINAGI) JUDGE HC-KAR SKS CT:KHV