N. Rukmini Murthy vs Jain Housing and Construction Ltd. and Others

Aravind Kumar, J.—Heard Sri Vardhaman Gunjal, learned Advocate appearing for petitioner, Sri Rajadithya Sadashivan, learned Advocate appearing for respondent-1, Sri Vivek Holla, learned Advocate appearing for respondents-5 and 6 and Sri. M.I. Arun, learned AGA appearing for State.

Petitioner is seeking for appointment of an Arbitrator by invoking Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short ''the Act'') contending inter alia that there exists a dispute between petitioner and respondents in respect of Joint Development Agreement dated 22.03.2004 and supplementary agreement entered between petitioner and respondent No. 1 on 02.07.2004, and as such, Arbitrator be appointed as agreed to between the parties under clause 22 of the Joint Development Agreement dated 22.03.2004. Hence, petitioner is seeking for appointment of an Arbitrator.

Sri Rajadithya Sadasivan, learned Advocate appearing for respondent No. 1 has opposed appointment of the Arbitrator on the following grounds:

(i) Agreement in question which has been pressed into service in which Arbitration clause is found namely, Joint Development agreement dated 22.03.2004 is hit by the provisions of the Registration Act, 1908 and the Karnataka Stamp Act, 1957 and Rules made thereunder and same being not enforceable, clause found therein also cannot be enforced;

(ii) There is no arbitrable dispute for being arbitrated;

By reiterating the contentions raised in statement of objections, he has sought for dismissal of the petition.

Sri Vivek Holla, learned Advocate appearing for respondents-5 and 6 submits that neither they are parties to the agreement dated 22.03.2004 nor they can be arrayed as parties to the lis between the petitioner and respondent No. 1 particularly when there is no privity of contract between respondents-5 and 6 and petitioner herein. Hence, he prays for dismissal of the petition insofar as respondents-5 and 6 are concerned.

Sri Vardhaman Gunjal, learned Advocate appearing for petitioner would elaborate his submission by contending that petitioner and respondents having entered into Joint Development Agreement on 22.03.2004 on account of certain changed circumstances, were perforced to enter into supplementary agreement on 02.07.2004 and accordingly they entered into an agreement which was required to be followed by the parties performing their reciprocal promises and on account of same having not been performed, particularly, by first respondent there is lis or dispute or differences which has arisen between the parties and as such, he submits that said dispute is an arbitrable dispute which has arisen between parties which requires to be adjudicated or arbitrated by Arbitrator to be appointed by this Court. Hence, he submits that prayer sought for in the petition be allowed.

In reply to the contention raised by learned Advocate appearing for respondent-1 with regard to non enforceability of arbitration clause on account of said deed being opposed to the provisions of the Registration Act, 1908 or Karnataka Stamp Act, 1957 is concerned, he would contend that agreement in question is a registered document and when the Registering authority has not raised any objection, such objection cannot be raised by respondent No. 1 and even otherwise, this is a matter which requires to be considered and adjudicated by the Arbitrator to be appointed by this Court.

Learned Advocate appearing for petitioner in reply to the argument advanced on behalf of respondents-5 and 6 contends that for effective adjudication of disputes between parties they are to be arrayed as parties to arbitration proceedings even though respondents-5 and 6 are not parties to the arbitration agreement or to the Joint Development agreement since they are claiming right to the property in question through respondent No. 1 and as such they would be necessary and proper parties to the lis and as such, they should also be arrayed as parties to the arbitration proceedings. In support of his submission, he has relied upon the judgment of Hon''ble Apex Court in the case of Chloro Controls (I) P. Ltd. Vs. Severn Trent Water Purification Inc. and Others, (2013) 1 ABR 563 : (2012) 4 ARBLR 1 : (2012) 111 CLA 1 : (2013) 1 CompLJ 19 : (2013) 1 CTC 418 : (2012) 10 JT 241 : (2012) 10 JT 187 : (2012) 4 RCR(Civil) 638 : (2012) 9 SCALE 595 : (2013) 1 SCC 641 .

Per contra, Sri Rajadithya Sadashivan, learned Advocate appearing for respondent No. 1 would contend that when there is no arbitrable dispute existing between parties particularly in the backdrop of petitioner having executed an agreement for full and final settlement of all claims, there is no necessity for an Arbitrator being appointed and petitioner should not be permitted to revive dead cause of action. Hence, he prays for dismissal of the petition. In support of his submissions, he has relied upon the following judgments:

(i) 1995(3) Supplement SCC 324 Nathani Steels Ltd. vs. Associated Constructions.

(ii) P.K. Ramaiah and Company Vs. Chairman and Managing Director, National Thermal Power Corpn., (1994) 1 SCALE 1 : (1994) 3 SCC 126 Supp .

(iii) AIR 2012 NOC 85 (AP) M/s. Lateef Brothers Real Estates, Dwarakapuri and Ors. vs. Varun Construction, Hyderabad and Ors.

Having heard the learned Advocates appearing for the parties and on perusal of the pleadings and citations relied upon by learned Advocates and after bestowing my careful and anxious consideration to the rival contentions, I am of the considered view that following points would arise for my consideration:

(i) Whether there is an arbitrable dispute existing between the parties and as such under clause 22 of agreement dated 22.03.2004 Arbitrator is required to be appointed to resolve said dispute?

(ii) What order?

In order to adjudicate the point formulated herein above, it would be necessary to extract relevant clause in the agreement which has bearing and impact on the contentions raised by the respective learned Advocates.

Clause 22 of the agreement dated 23.02.2004 which relates to arbitration and relied upon in aid of the relief sought for in the petition reads as under:

"22) ARBITRATION:

In the event of breach of the terms of this agreement or in the event of any differences or disputes arising between the parties in regard to this Agreement or any matter relating thereto, the same shall be referred to and settled by Arbitration under the Provisions of the Arbitration and Conciliation Act in force under the Bangalore Courts Jurisdiction."

A perusal of the above clause would indicate that in the event of any difference or dispute arising between parties with regard to the agreement or any matter relating thereto, same requires to be referred to and settled by arbitration as per the provisions of the Act.

On the issue of there being existing arbitration clause in the agreement in question and parties being on ad idem on this issue, there is no dispute. Hence, much importance is not attached to the said clause during the course of this order.

Perusal of the order sheet of this petition would indicate that this Court while examining as to whether subject agreement is to be construed as hit by provisions of the Registration Act, 1908 and Karnataka Stamp Act, 1957 had directed the learned Additional Government Advocate to ascertain the Stamp duty payable if any. A memo has been filed by learned Additional Government Advocate enclosing report of Senior Sub-Registrar which has since been placed on record. Learned AGA had also assisted this Court as can be seen from the order sheet though State is not a party to these proceedings.

Perusal of the petition averments would clearly indicate that petitioner had entered into a Joint Development Agreement with first respondent and after negotiations it was reduced into writing as per the Joint Development Agreement dated 22.03.2004. On account of parties to the agreement altering or changing their stand, it necessitated for supplementary agreement being entered into between them on 02.07.2004. Execution of supplementary agreement between the parties is also not in dispute.

Grievance of the petitioner is, as agreed to by first respondent under the supplementary agreement dated 02.07.2004, owner''s area had to be delivered to the petitioner completed in all respects and certain additional area was also requires to be handed over by the first respondent and this term of the contract having not been adhered to by first respondent, it has perforced the petitioner to seek for dispute being resolved through arbitration and by virtue of parties having resolved to settle their dispute through arbitration, Arbitrator is required to be appointed. Pleadings would clearly indicate that subsequent to these two documents coming into existence, parties have entered into an agreement which is termed as "FULL AND FINAL SETTLEMENT AGREEMENT" vide Annexure-C undated. Petitioner does not dispute execution of this Full and Final Settlement Agreement. In para 11 of the petition in question, petitioner contends that first respondent herein requested the petitioner to agree or consent to transfer additional number of apartments so as to set off refundable deposit towards those apartments or can be adjusted/worked out as liquidated damages for delay in delivering apartments, to which petitioner has with open eyes signed the said deed as could be seen from Annexure-C. It would be necessary to extract the relevant clauses in the said agreement which indicates that petitioner knowing fully well and being conscious of the fact that it is a "Full and Final Settlement Agreement" which was pursuant to Joint Development Agreement dated 22.03.2004 and supplementary agreement dated 02.07.2004, has affixed her signature. The relevant clauses of said document or deed reads as under:

"WITNESSETH:

WHEREAS the First Party as the owner of the Property described in Schedule ''A'' herein entrusted the same to the Second Party for development and sale in terms of a Joint Development Agreement dated 22/03/2004, registered as Document No. 7148/2003-04 in Book-I and stored in C.D. No. JAYD 8, in the Office of the Sub-Registrar, Jayanagar, Bangalore and simultaneously executed a Power of Attorney empowering the Second Party to develop and sell Second Party''s share of land and buildings to be built in Schedule ''A'' Property.

WHEREAS, the parties identified the apartments falling to their respective shares and recorded the same in the form of writing. By a further Supplementary Agreement dated 02/07/2004, the parties recorded the revised allotment of the built-up areas and additional consideration in terms stated therein.

NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:-

1) The First Party declares and confirms that the Second Party has fully and satisfactorily complied with all its obligations under the Joint Development Agreement dated 22/03/2004, Supplementary Agreement dated 02/07/2004 and the Power of Attorney dated 22/03/2004 and confirms that the Second Party has exercised the powers under the Power of Attorney dated 22/03/2004 in compliance of the powers conferred upon them and the First Party has no claims against the Second Party in respect thereto.

2) to 7) xxx

8) The First Party hereby ratifies all the acts done by the Second Party in Sale of the apartments earmarked for the share of Second Party in the Schedule ''B'' Property and declares that all the sales/transfers effected by the Second Party are binding upon the First Party.

9) Both the parties place on record and confirm that they have no claims against each other in respect of Schedule ''A'' Property or Schedule ''B'' Property or Schedule ''C'' Property and/or the Agreements entered into between them and all the matters between them are fully and finally settled to their mutual satisfaction."

A perusal of the above clauses in "Full and Final Settlement Agreement" would clearly indicate that same has come into existence after parties agreed upon that all matters between them are fully and finally settled and in token of having settled all such claims, they have affixed their signatures. In fact, petitioner has consented to ratify all acts done by second party therein i.e., first respondent herein for sale of the apartments earmarked for the share of second party and agreeing thereunder that it would be binding upon her. Having said so in the "Full and Final Settlement Deed", petitioner cannot heard to contend that said agreement or final settlement agreement has come into existence under different facts and circumstances or it was not the intention of parties. It is not the case of petitioner that said agreement is outcome of fraud or threat, force or coercion. When petitioner has willingly and with open eyes has affixed her signature to the document in question and settled the dispute with first respondent and pursuant to the same, has affixed her signature to the Full and Final Settlement Agreement, she cannot turn around to contend that there exists a arbitrable dispute between parties which has to be adjudicated by an Arbitrator. Arbitration clause found in the agreement has got spent itself. Nothing else has remained for being enforced and as such, question of appointing Arbitrator does not arise.

Hon''ble Apex Court in the cases of NATHANI STEELS LTD., P.K. RAMAIAH AND COMPANY and M/S. LATEEF BROTHERS REAL ESTATES, DWARAKAPURI has held that where there is satisfaction or accord by final settlement of all claims between parties and accordingly agreement is entered into, then any stand contrary to such agreement has to be held as an afterthought or devised to tide over such deed of settlement and as such, it came to be held that in such circumstances there would be no arbitrable dispute for being referred to arbitration. Said dicta laid down by Hon''ble Apex Court is squarely applicable to the facts on hand.

In that view of the matter, point No. (1) is answered against petitioner and in favour of respondents. In that view of the matter question of considering other contentions does not arise.

For reasons aforestated, I proceed to pass the following:

ORDER

(i) Civil Miscellaneous Petition stands dismissed.

(ii) Costs made easy.

Sri M.I. Arun, learned AGA is permitted to file memo of appearance in this case though State is not a party.