A single judge bench of the Madras High Court comprising Justice Krishnan Ramasamy while entertaining a dispute under the Arbitration and Conciliation Act observed that even though there was no express clause in the contract mentioning that 9% interest has to be paid by the respondents, the emails and other media could be considered as a record for the said agreement between the parties. They further appointed an arbitrator to adjudicate the dispute.
Brief Facts:
The petitioners gave their landed property admeasuring 4800 sq. ft to the respondent/builder for joint development and entered into an Agreement for Development dated 05.02.2018, at Chennai for the construction of luxury residential apartments. As per the said agreement, the respondent would construct the apartment out of which, the petitioners are entitled to retain 943 sq. ft of undivided share of land and a flat measuring 1814 sq. ft along with a monetary consideration of Rs.7.25 Crores.
The grievance of the petitioners is that in terms of the said agreement, within a period of 18 months from the date of obtaining the plan approval, the respondent is supposed to complete the construction of the apartment and hand over the same to the petitioner. The respondent was supposed to have handed over the flats on 19.09.2020.
However, the respondent handed over the flats only on 12.07.2021. That apart, the respondent was supposed to pay a sum of Rs.7.25 Crores immediately upon the registration of UDS. However, even after the Registration of UDS between 11.07.2019 and 11.01.2021, the respondent failed to make the payment. The respondent admitted the lapses on their part and agreed to pay the interest at the rate of 9% per annum and also acted upon such assurances by making three interest payments from February to April 2021.
Thereafter, the respondent declined to pay the interest. Hence, to resolve such dispute, by invoking Clause 11 of the Joint Development Agreement dated 05.02.2018, the petitioners have sent a notice under Section 21 of the Act on 23.08.2022 by nominating Mr. Madhivanan to act as Arbitrator. However, the respondent by their reply letter expressed their unwillingness to the appointment of the Arbitrator. Hence, the petitioners have filed the present petition seeking for appointment of an Arbitrator.
Contentions of the Respondent:
The learned counsel of the respondent submitted that the present dispute pertains to the payment of 9% interest and nowhere in the contract, the parties agreed for payment of interest. In the absence of any such provision of payment, the respondent is not liable to pay interest and hence, this petition is liable to be dismissed. However, with regard to the delay in handing over the flats, as per the provision of the agreement, the respondent agreed to pay a sum of Rs.50,000/- per month and Rs.20 per sq. ft as compensation, in which there is no dispute at all. Hence, the petition must be dismissed.
Observations of the Court:
Upon hearing, the court observed that the dispute in the present case pertains to the payment of 9% interest for the delay in handing over the flats. A perusal of the agreement showed that, as contended by the learned Senior Counsel there was no clause for payment of interest at the rate of 9%.
However, there was an E-mail communication between the petitioners and the respondent on 21.07.2021, 15.06.2022, 01.07.2022, and 06.12.2022. All these E-mail correspondences showed that there was a discussion about the 9% interest between the petitioner and the respondent and the respondent has also made the interest payment for three months and thereafter failed to do so.
Further, as per Section 7 (4) (b) of the Arbitration and Conciliation Act, an exchange of letters, telex, telegrams, or another means of telecommunication provides a record of the agreement.
In the present case, there was a communication between the petitioners and the respondent by virtue of electronic mode, and prima facie it appeared to the court that the parties have agreed for 9% interest for the lapses on their part.
However, the respondent was now disputing the payment of interest. Therefore, the court held that all these issues cannot be decided at this stage and the same has to be decided by examining the parties. In such circumstances, the Court appointed an Arbitrator to enter upon reference and adjudicate the disputes inter se the parties.
Decision of the Court:
The Court appointed the Arbitrator and left it open to the petitioner as well as the respondent to seek other reliefs under the provisions of Arbitration and Conciliation Act 1996 before the Arbitrator.
Case Title: R. Sivasankaran and anr. vs M/s Harmony Residences Private Limited
Coram: JUSTICE KRISHNAN RAMASAMY
Case No.: Arb. O.P (Com. Div). No.598 of 2022
Advocate for the Petitioners: Mr. S. Rajasekar
Advocate for the Respondent:Mr. K.S. Viswanathan
Read Judgment @LatestLaws.com:
Picture Source :