MRS. SAMYUKTA KOPPULA v. M/S SATKRUTI EDUCATION

CORAM: HON'BLE MR. JUSTICE ASHOK S.KINAGI - 3 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR ORAL ORDER This petition is filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 (‘Act’ for short) for appointment of a Sole Arbitrator to resolve the dispute between the parties to the petition in terms of clause 33 of the lease deed dated 04.02.2022 vide Annexure-A.

#2. Brief facts leading rise to the filing of this petition are as follows:

2.1. The petitioners, respondent Nos.2 and 3 being the joint owners of the property in question, have executed a registered lease deed dated 04.02.2022 in favour of respondent No.1. The said lease deed was executed through power of attorney holder of the petitioners and respondent Nos.2 and 3. The petitioners issued a revocation notice dated 08.02.2024 to the GPA holder, withdrawing their authority under the GPA. The petitioners issued a termination notice dated 16.03.2024 by invoking clause 21.2 of the lease deed. Respondent No.1 replied to the termination notice vide reply notice - 4 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR dated 06.05.2024 seeking for extension of time. The petitioners issued a legal notice dated 27.03.2025 confirming the expiry and warning against the illegal possession. Respondent No.1 replied to the said notice on

30.04.2025 claiming extension. On 13.05.2025, the petitioners returned the unauthorised payment made by respondent No.1 to the petitioners via demand draft. The petitioners issued a legal notice along with the demand draft on 19.05.2025. On 26.05.2025, respondent No.1 replied to the termination and returning of a demand draft. There is an arbitration clause in the registered lease deed. The petitioners, by invoking the arbitration clause, issued a notice dated 04.07.2025 under Section 21 of the Act to respondent No.1. Respondent No.1 did not reply to the arbitration notice. Hence, this petition.

#3. Respondent No.1 filed a statement of objections contending that, the petitioners filed this petition by suppressing the material facts. It is also contended that, - 5 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR no arbitral dispute arose between the parties. Accordingly, prays to dismiss the petition.

#4. Respondent No.3 filed a statement of objections raising several grounds contending that, the petition filed by the petitioners under Section 11(6) of the Act is not maintainable and it is also contended that, the petitioners have not issued arbitration notice under Section 21 of the Act to respondent Nos.2 and 3. Hence, on these grounds, prays to dismiss the petition.

#5. Heard the arguments of learned counsel for the petitioners and learned counsel for the respondents.

#6. Learned counsel for the petitioners submits that, the petitioners and respondent Nos.2 and 3 have executed a lease deed in favour of respondent No.1; the petitioners and respondent No.2 have executed a power of attorney in favour of respondent No.3. The petitioners have issued a revocation notice to the GPA holder of the petitioners withdrawing her authority. Thereafter, the - 6 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR petitioners issued a termination notice to respondent No.1 by invoking clause 21.2 of the lease deed. He submits that, there is an arbitration clause in the lease deed and the arbitral dispute arose between the petitioners and respondent No.1. He submits that, respondent Nos.2 and 3 have filed an application for impleading before this Court to come on record as respondent Nos.2 and 3. He submits that, the question of issuing a notice under Section 21 of the Act to respondent Nos.2 and 3 is not a fatal to the case on hand. To buttress his arguments, he has placed reliance on the judgments of the Hon'ble Apex Court in the cases of Bhagheeratha Engineering Ltd. Vs. State of Kerala1 and Adavya Projects Private Limited Vs. Vishal Structurals Private Limited and Others2. Hence, on these grounds, he prays to allow the petition.

#7. Per contra, learned counsel for respondent Nos.2 and 3 submit that, the petition filed by the 1 2026 SCC OnLine SC 5 2 (2025) 9 SCC 686 - 7 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR petitioner is not maintainable. Prior to the filing of the instant petition, the petitioners have not issued a notice under Section 21 of the Act. Issuing of a notice under Section 21 of the Act is a prerequisite. Hence, on these grounds, pray to dismiss the petition.

#8. Per contra, learned counsel for respondent No.1 submits that, the petitioners, respondent Nos.2 and 3 have not terminated the tenancy by issuing a notice under Section 106 of the Transfer of Property Act, 1882. Hence, on this ground, he prays to dismiss the petition against respondent No.1.

#9. Perused records and considered submissions of the learned counsel for the parties.

#10. The point that would arise for consideration is as follows: Whether the petitioners have made out a ground to appoint an Arbitrator to resolve the dispute between the parties to the petition in terms of clause 33 of the - 8 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR lease deed dated 04.02.2022 as per the provisions of the Act in the absence of notice under Section 21 of the Act to respondent Nos.2 and 3?

#11. The undisputed facts are that, the petitioners respondent Nos.2 and 3 have let out the premises to respondent No.1 under the registered lease deed dated

04.02.2022; the said lease deed was executed by general power of attorney holder of the petitioners and respondent No.2. The petitioners issued a revocation notice of the general power of attorney on 08.02.2024 withdrawing the authority given to the power of attorney holder under the GPA. The petitioners issued a termination notice dated

16.03.2024 to respondent No.1 in terms of clause 21.2 of the lease deed. Respondent No.1 replied on 06.05.2024 to legal notice admitting the expiry of lease on

04.02.2025 and seeking extension of time. Even after the expiry of lease, respondent No.1 continued in possession of the property in question. There is an arbitration clause in the lease deed, which reads as follows: - 9 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR “33. DISPUTE RESOLUTION: If any Dispute arising between the Parties is not amicably settled within thirty (30) days of commencement of attempts to settle the same, the Dispute shall be referred to arbitration by binding arbitration by a sole Arbitrator mutually appointed by the Parties. The Parties agree that the arbitration proceedings will be conducted at Bangalore and shall be governed by the provisions of the [Indian] Arbitration and Conciliation Act, 1996 or any statutory modification or reenactment thereof for the time being in force. The decision of the arbitrators shall be final and binding on the Parties. Proceedings will be governed by the Karnataka Arbitration Centre (Domestic and International) Rules, 2012” Admittedly, the dispute arose between the petitioners and respondent No.1. The petitioner, invoking arbitration clause, has issued a notice to respondent No.1 under Section 21 of the Act on 04.07.2025 vide Annexure-L.

#12. Initially, the petitioner filed this petition against respondent No.1, thereafter respondent Nos.2 and 3 have filed the applications impleading them as respondents. It is contended that, the issuance of notice - 10 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR under Section 21 of the Act is a prerequisite. To consider the case on hand, it is necessary to examine the judgment of the Hon'ble Apex Court in the case of Adavya Projects Private Limited (supra), wherein the Hon'ble Apex Court has framed the point for its determination, which reads as follows: “14.1. I. Whether service of a Section 21 notice and joinder in a Section 11 application are prerequisites to implead a person/entity as a party to the arbitral proceedings?” The said issue was answered in paragraph Nos.23 and 25 as follows: “23. In this case, a Section 21 notice was undisputedly issued by the appellant under Clause 40 of the LLP agreement on 17-11-2020; but the problem arises because this notice was issued only to Respondent

#1. However, there is nothing in the wording of the provision or the scheme of the ACA to indicate that merely because such notice was not served on Respondents 2 and 3, they cannot be impleaded as parties the arbitral proceedings. The relevant considerations joining them as parties to the arbitration will be discussed at a later stage. - 11 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR

#25. A similar rationale may be adopted in this case as well, especially considering the clear purpose served by a Section 21 notice. Extending this logic, non-service of the notice under Section 21 and the absence of disputes being raised against Respondents 2 and 3 in the appellant's notice dated 17-11-2020 do not automatically bar their impleadment as parties to the arbitration proceedings.” (Emphasis supplied) Further, in the conclusion, the Hon'ble Apex Court held as follows: “60.1. A notice invoking arbitration under Section 21 ACA is mandatory as the date of commencement of arbitration, which is essential for determining limitation periods and the applicable law, and it is a prerequisite to filing an application under Section

#11. However, merely because such a notice was not issued to certain persons who are parties to the arbitration agreement does not denude the Arbitral Tribunal of its jurisdiction to implead them as parties during the arbitral proceedings.” (Emphasis supplied) - 12 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR Admittedly, from the perusal of the arbitration notice, it discloses that, the petitioners have not raised any dispute against respondent Nos.2 and 3 in the notice.

#13. Further, the Hon'ble Apex Court in the case of Bhageeratha Engineering Ltd. (supra), held paragraph No.16, which reads as follows: “OBJECT OF SECTION 21 OF A&C ACT:—

#16. Secondly, the object of Section 21 of A&C Act, is only for the purpose of commencement of arbitral proceedings is also well settled. Section 21 is concerned only with determining the commencement of the dispute for the purpose of reckoning limitation. There is no mandatory prerequisite for issuance of a Section 21 notice prior to the commencement of Arbitration. Issuance of a Section 21 notice may come to the aid of parties and the arbitrator in determining the limitation for the claim. Failure to issue a Section 21 notice would not be fatal to a party in Arbitration if the claim is otherwise valid and the disputes arbitrable.” (Emphasis supplied) - 13 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR Considering the proposition of law laid down by the Hon'ble Apex Court, non-issue of a notice under Section 21 would not be a fatal to the parties in the arbitration.

#14. There is an arbitration clause in the lease deed executed between the parties. Respondent Nos.2 and 3 are the family members, and the co-owners have let out property. The dispute arose between the landlords and the tenant. The main grievance of the petitioners is against respondent No.1 and not against respondent Nos.2 and 3. Admittedly, the petitioners have issued arbitration notice under Section 21 of the Act to respondent No.1. Thus, there is a compliance under Section 21 of the Act.

#15. In view of the above discussion, the petitioner has made out a ground to refer the arbitral dispute to the arbitration. Accordingly, I answer the point consideration in the affirmative, and proceed to pass the following: - 14 - NC: 2026:KHC:7387 CMP No. 494 of 2025 HC-KAR ORDER i. The civil miscellaneous petition is allowed; ii. Hon'ble Sri. Justice P. Krishna Bhat, Former Judge of this Court is nominated as an Arbitrator to resolve the dispute between the parties to the petition in terms of clause 33 of the lease deed dated 04.02.2022 as per the provisions of the Arbitration and Conciliation Act, 1996 and Rules; iii. The Registry is directed to communicate this order to the learned Arbitrator and the Director of Arbitration and Conciliation Centre, Bengaluru; iv. All the contentions of the parties are kept open, including the contention of respondent Nos.2 and 3 regarding the maintainability of the claim petition; v. The Registry is directed to return the originals of the documents, if any, to the parties after retaining the photocopies of the same; vi. Pending application(s), if any, shall stand disposed of. Sd/- (ASHOK S.KINAGI) JUDGE PA | List No.: 2 Sl No.: 33