Bombay High Court
K. V. Naidu vs Integrated Home Solutions Private ... on 14 October, 2025
Author: Manish Pitale
Bench: Manish Pitale
2025:BHC-OS:18806
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carbp-489.22.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION NO. 489 OF 2022
K. V. Naidu ... Petitioner
Versus
Integrated Home Solutions Pvt. Ltd. & Anr. ... Respondents
WITH
INTERIM APPLICATION NO. 462 OF 2024
WITH
INTERIM APPLICATION NO. 457 OF 2024
WITH
INTERIM APPLICATION NO. 458 OF 2024
IN
COMMERCIAL ARBITRATION PETITION NO. 489 OF 2022
******
Mr. Rahul Kamerkar a/w Ms. Aparajita R. Jha for Petitioner.
Mr. Piyush Raheja a/w Mr. Bhuvan Singh, Ms. Jyoti Ghag, Mr.
Shailesh Prajapati and Mr. Ankit Singhal i/by Dua Associates for
Respondents.
******
CORAM: MANISH PITALE, J.
RESERVED ON : 7th OCTOBER 2025
PRONOUNCED ON : 14th OCTOBER 2025
ORDER :
. By this petition, filed under Section 34 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as 'Arbitration
Act' for short), the petitioner has challenged arbitration award
dated 24th January 2022 passed by a sole arbitrator, whereby the
claim of the respondents was allowed and the counter-claim filed
by the petitioner was rejected. As a consequence, the petitioner is
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liable to pay an amount of Rs.18 crores along with interest, as
indicated in the operative portion of the arbitral award, to the
respondents.
2. The petitioner and the respondents entered into transactions
concerning properties consisting of residential apartment units.
The documents on record show that there were two sets of
transactions concerning properties at Yelahanka and
Yeshwanthpur. While it is the case of the petitioner that the two
transactions were interconnected, according to the respondents
these were two distinct transactions and that the mutual
obligations pertaining to these two transactions were independent
of each other.
3. One set of transaction concerns such residential units
pertaining to the year 2014-15 under which the respondents paid
certain amounts, as regards identified residential units and in that
context, specific amounts exchanged hands. The other transaction
consisted of a series of agreements executed between the parties,
styled as a Development Agreement dated 11 th November 2015,
an Exclusive Marketing and Collection Agency Agreement
(EMCA) also dated 11th November 2015, a Security Deposit
Agreement (SDA) dated 12th November 2015 and eventually, a
Final Agreement dated 15th November 2017. These agreements
pertained to development of property at Yeshwanthpur, as also the
aspect of marketing the residential units under the initial
transaction pertaining to residential units at Yelahanka. Under the
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SDA a sum of Rs.18 crores was agreed to be paid to the petitioner,
as refundable security deposit for the purposes of securing the
obligations and it was supposed to be refunded by the petitioner
over a period of time. In the interregnum, on 20 th March 2017,
the petitioner executed an equitable mortgage by deposit of titles,
whereby specific residential units were mortgaged as against some
of Rs.5 crores advanced as loan. Eventually, the aforesaid final
agreement dated 15th November 2017 had to be executed, as the
petitioner was unable to refund amount of Rs.15 crores under the
SDA upto November 2017. The final agreement reaffirmed and
reiterated the earlier agreements and acknowledged the liability of
the petitioner to refund the said amount deposited under the SDA.
This final agreement referred to a "statement of amounts
receivable", upon which the petitioner has placed much emphasis.
It is to be noted that the aforementioned agreements contained
arbitration clauses and one of the issues sought to be raised on
behalf of the petitioner concerns the applicability of particular
arbitration clause, which also has a bearing on the question as to
whether the arbitral tribunal in the present case was constituted as
per the arbitration agreement between the parties.
4. It is matter of record that over the aforesaid period of time
between 2014-2019, business and financial transactions did
continue between the parties. But, disputes arose, as a
consequence of which, the petitioner received an email on 15 th
June 2020 from the respondents, stating that a petition had been
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filed in this Court under Section 9 of the Arbitration Act, seeking
interim measures. On 19th June 2020, this Court granted limited
interim relief in favour of the respondents to the effect that
pending the arbitral proceedings, the petitioner herein stood
restrained from dealing with and disposing of 16 residential units
in the project specifically mentioned in the final agreement dated
15th November 2017. This Court further recorded an undertaking
of the respondents that they would initiate arbitration proceeding
within six weeks.
5. On 29th July 2020, the respondents invoked arbitration
under Section 21 of the Arbitration Act by sending notice to the
petitioner, specifically relying upon the arbitration clause
contained in the final agreement dated 15 th November 2017
executed between the parties. The arbitration clause therein, in
fact, recorded that the arbitration clause under the EMCA dated
11th November 2015 would apply. On this basis, while invoking
the arbitration, the respondents declared their intention of
appointing a sole arbitrator (a former Judge of this Court and
former Chief Justice of Allahabad High Court), calling upon the
petitioner to respond to the notice and to join in a preliminary
meeting with the sole arbitrator.
6. On 6th August 2020, the petitioner responded to the
aforesaid notice invoking the arbitration, disputed the claims made
by the respondents and did show willingness to participate in the
arbitration. In the reply, the petitioner also specifically stated that
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he was ready to participate in the arbitration proceeding, so as to
avoid ex-parte order being passed, without prejudice to his rights
to challenge the agreements and to claim compensation against the
respondents for cheating, fraud, forgery and breach of trust, as
also seeking remedies under criminal law.
7. On 31st October 2020, the petitioner caused a FIR be
registered at Bengaluru against the respondents, alleging forgery
and fabrication on their part. It was also claimed that
unauthorized withdrawals were made from the bank account of
the petitioner by the respondents, giving rise to criminal offences.
The FIR was registered for offences under Section 406, 420 and
506 read with 34 of the Indian Penal Code, 1860 (IPC).
8. The sole arbitrator entered upon reference and the arbitral
proceedings proceeded with filing of a claim, written statement
with counter-claim and other procedural formalities. Evidence was
recorded upon issues being framed. During the pendency of the
arbitral proceedings, on 18th March 2021, the petitioner filed a
private complaint before the Additional Chief Metropolitan
Magistrate, Bengaluru, reiterating the allegations of cheating,
forgery and criminal breach of trust against the respondents. In the
meanwhile, the petitioner had also filed an application under
Section 16 of the Arbitration Act, challenging the very jurisdiction
of the sole arbitrator and also claiming that the arbitration could
not take place at Mumbai, by relying upon arbitration clauses
contained in the Joint Development Agreement and the SDA. It
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was claimed that since both these agreements contained arbitration
clauses, requiring a tribunal of three members with the place of
arbitration being Bengaluru, the sole arbitrator appointed and
having entered reference at Mumbai, was wholly without
jurisdiction. By an order dated 21st November 2020, sole
arbitrator rejected the aforesaid contention of the petitioner by
relying upon the arbitration clause contained in the final
agreement dated 15th November 2017, read with the arbitration
clause contained in the EMCA dated 11 th November 2015. Since
the objection raised under Section 16 of the Arbitration Act on
behalf of the petitioner was rejected by the aforesaid order, in the
present petition filed under Section 34 of the Arbitration Act, the
petitioner has also assailed the aforesaid order and the findings
rendered therein by the sole arbitrator.
9. On 13th December 2020, the petitioner filed an application
under Section 17 of the Arbitration Act, seeking a direction against
the respondents for producing details of bank transactions related
to the respondents. By an order dated 21 st December 2020, the
sole arbitrator deferred decision on the said application, observing
that the petitioner could elicit required information during cross-
examination of the relevant witnesses. It is alleged on behalf of the
petitioner that during the course of the arbitration proceedings, on
recording of evidence of the witnesses, certain vital questions
sought to be put on behalf of the petitioner during cross-
examination, were disallowed, thereby demonstrating an unfair
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procedure adopted by the sole arbitrator.
10. On 30th March 2021, the sole arbitrator passed an order
rejecting the aforesaid application filed on behalf of the petitioner
under Section 17 of the Arbitration Act. It was observed that
rejection of the application would not preclude the counsel for the
parties from arguing their case on the basis of the
material/documents produced on record and also the evidence led
by the parties to prove their case. According to the petitioner, this
was a glaring procedural infirmity, substantially preventing the
petitioner from effectively placing his case before the arbitral
tribunal.
11. Eventually on 24th January 2022, the impugned arbitral
award was pronounced. Subsequently, on an application moved by
the respondents for correction of certain errors in the arbitral
award, in July 2022, the sole arbitrator communicated the order
on the said application.
12. Since the claim of the respondents was granted and the
counter-claim of the petitioner was rejected, the petitioner was
constrained to file the present petition under Section 34 of the
Arbitration Act. The learned counsel for the parties were heard at
length, during the course of hearing.
13. Mr. Rahul Kamerkar, learned counsel for the petitioner
submitted that even if the scope for interference in an arbitral
award is limited and specific grounds under Section 34 of the
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Arbitration Act are required to be demonstrated, in the present
case, the arbitral award deserves to be set aside on the grounds
contained in Section 34(2)(a)(iii), (iv), (v) and Section 34(2)(b)(ii)
of the Arbitration Act. It was submitted that the sole arbitrator
also erred in rejecting the application under Section 16 of the
Arbitration Act and this was also an independent ground for
demonstrating the grave error committed by the learned
arbitrator. It was further submitted that since the petitioner had
raised issues pertaining to forgery, fabrication and such acts on the
part of the respondents that gave rise to criminal proceedings, the
dispute itself was rendered non-arbitrable. These specific grounds
were raised to demonstrate that this Court ought to exercise
jurisdiction under Section 34 of the Arbitration Act to set aside the
impugned arbitral award. It was also prayed that the counter-claim
of the petitioner deserved to be granted.
14. In order to demonstrate that the said grounds indeed arise in
the facts and circumstances of the present case, the learned counsel
for the petitioner invited attention of this Court to the contents of
the application filed under Section 17 of the Arbitration Act. It
was submitted that the respondents, who were claimants before
the arbitral tribunal, were required to first demonstrate that the
amount of Rs.18 crores was actually transferred to the petitioner
under the subject agreement and that for the said purpose, details
in the form of a table showing actual dates of transfer of the
amounts along with details of the instruments and the modes of
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such transfers, were required to be placed on record. The
arbitrator deferred the said application, observing that the
petitioner could ask appropriate questions in cross-examination
and indicated that the prayer could be taken up for consideration
subsequently. According to the learned counsel for the petitioner,
at the stage of cross-examination, vital questions sought to be put
by the petitioner, were disallowed and when the petitioner sought
to press reliefs in the aforementioned application filed under
Section 17 of the Arbitration Act, by order dated 30th March 2021,
it was rejected. In other words, the defective procedure adopted
by the sole arbitrator resulted in the petitioner being prevented to
present his case in a wholesome manner before the arbitrator. On
this basis, it was submitted that the specific ground for challenge
under Section 34(2)(a)(iii) of the Arbitration Act arises in the
present case and on this ground alone, the impugned arbitral
award deserves to be set aside. Much emphasis was placed on the
"statement of amounts receivable" forming a part of the final
agreement dated 15th November 2017 executed between the
parties. It was submitted that the said document was completely
ignored by the sole arbitrator, despite repeated requests made on
behalf of the petitioner. An attempt on the part of the petitioner to
put questions to the witnesses during cross-examination on the
basis of the aforesaid document, was also thwarted by the
arbitrator, thereby demonstrating that the petitioner was unable to
present his case in the proper perspective before the arbitrator.
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15. It was further submitted that if the said documents i.e.
statements of amounts receivable, was to be appreciated by the
tribunal, it would have come to light that the respondents could
not isolate the amount of Rs.18 crores from the entire set of
transactions between the parties, including those pertaining to the
Yelahanka property, thereby demonstrating that certain amounts
were receivable even by the petitioner from the respondents. On
this basis, it was alleged that the learned arbitrator failed to
properly appreciate the nature of disputes between the parties and
the arbitral award consequentially dealt with disputes that were
not contemplated and contained decisions beyond the scope of the
disputes submitted for the arbitration. On this basis, the learned
counsel for the petitioner raised the ground under Section 34(2)(a)
(iv) of the Arbitration Act, to challenge the impugned arbitral
award.
16. As regards jurisdiction of the sole arbitrator and the place of
arbitration being Mumbai, it was submitted that an objection in
the first instance was raised on behalf of the petitioner under
Section 16 of the Arbitration Act. The learned arbitrator failed to
appreciate the contentions of the petitioner in that regard, as a
consequence of which, the application under Section 16 of the
Arbitration Act stood erroneously dismissed. The arbitration
clauses in the said development agreement dated 11 th November
2015 and SDA dated 12th November 2015 required an arbitral
tribunal of three members and the place of arbitration to be
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Bengaluru. Due to failure in appreciating the said aspect of the
matter, the sole arbitrator fell in error in rejecting the application
under Section 16 of the Arbitration Act, which went to the very
root of the matter concerning jurisdiction of the arbitrator. On a
proper appreciation of the documents on record, the application
ought to have been allowed, thereby demonstrating that the very
composition of the arbitral tribunal was vitiated, giving rise to
ground under Section 34(2)(a)(v) of the Arbitration Act to
challenge the impugned award.
17. The learned counsel for the petitioner further emphasized
that the entire approach adopted by the learned arbitrator, while
deciding the issues, arising between the parties demonstrated that
it not only suffered from procedural infirmity, but the manner in
which the oral and documentary evidence on record was
appreciated, gave rise to a ground under Section 34(2)(b)(ii) of the
Arbitration Act. The entire approach contravened the fundamental
policy of Indian law and on this ground also, the arbitral award
deserved to be aside.
18. It was further submitted that the petitioner realised the
extent of fraud committed by the respondents when the actual
disputes arose between the parties. According to the petitioner,
documents were got signed from him in a clandestine and
fraudulent manner, giving rise serious questions of fraud, forgery
and fabrication. This had also led to initiation of criminal
proceedings, thereby demonstrating that the disputes arising in the
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present case were non-arbitrable. It was submitted that upon
realizing the nature of disputes, the sole arbitrator should have
held his hands and left it to the parties to approach the competent
Court for determination of such serious questions of fraud,
forgery and fabrication. On this count also a serious challenge was
raised to the impugned arbitral award.
19. In support of the said submissions, the learned counsel for
the petitioner relied upon judgments of the Supreme Court in the
case of Oil and Natural Gas Corporation Limited v/s. Western
Geco International Limited, (2014) 9 SCC 263 , Ssangyong
Engineering and Constructions Company Limited v/s. National
Highways Authority of India (NHAI), (2019) 15 SCC 131 and
Associate Builders v/s. Delhi Development Authority, (2015) 3
SCC 49. It was submitted that therefore, the impugned arbitral
award ought to be set aside.
20. On the other hand, Mr. Piyush Raheja, learned counsel
appearing for the respondents submitted that a fundamental flaw
in the contentions raised on behalf of the petitioner pertained to
mixing up two distinct transactions executed between the parties.
One concerning the Yelahanka property and the other concerning
Yeshwanthpur property. It was submitted that the relevant
agreements in the present case, eventually culminating into the
final agreement dated 15th November 2017, would show that
when the petitioner defaulted on his commitments under the
development agreement dated 11 th November 2015, EMCA dated
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11th November 2015 and SDA dated 12th November 2015, that the
said final agreement had to be executed. This final agreement
recorded acknowledgement on the part of the petitioner about his
failure to abide by commitments and it provided for the way
forward, along with a specific arbitration clause, which bodily
lifted the arbitration clause in the EMCA for resolution of
disputes. Thus, the attempt on the part of the petitioner to mix up
other transactions with the specific transaction of the respondents
having given Rs.18 crores to the petitioner, ought not to be
permitted and the dispute pertaining to entitlement of the
respondents for refund of that specific amount with interest only
needs to be taken into consideration.
21. It was submitted that once this clarity is achieved, the
elaborate contentions sought to be raised on behalf of the
petitioner can be demonstrated to be unsustainable, thereby
showing that the impugned arbitral award does not deserve
interference.
22. It was submitted that the learned arbitrator correctly
appreciated the nature of dispute raised by the respondents
(original claimants), thereby applying arbitral clause contained in
the EMCA to hold against the petitioner while rejecting the
application under Section 16 of the Arbitration Act. The learned
arbitrator also went into great detail while appreciating the
documents to conclude that amounts totaling to Rs.18 crores were
indeed transferred into the account of the petitioner in pursuance
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of the SDA.
23. Having appreciated such evidence and material on record,
the learned arbitrator correctly found that the respondents had
proved transfer of such amounts as the basis for their claim for
refund of the same along with interest. In the face of such
findings, the insistence of the petitioner upon a table with details
to be produced by the respondents was wholly misplaced and in
that context, the application under Section 17 of the Arbitration
Act was correctly rejected. There was no procedural infirmity and
hence, no question of the petitioner being deprived of the
opportunity to present his case before the arbitrator. It was
submitted that the ground under Section 34(2)(a)(iii) of the
Arbitration Act clearly does not arise in the facts and
circumstances of the present case.
24. It was further submitted that once the nature of dispute
being restricted to the amount advanced to the petitioner and the
claim of the respondents for its refund, is appreciated, it becomes
clear that the ground under Section 34(2)(a)(iv) also does not arise
in the facts and circumstances of the present case. The learned
arbitrator clearly decided the dispute that actually arose between
the parties and there is no question of the arbitrator having gone
beyond the dispute that actually arose between the parties. As
regards the ground under Section 34(2)(a)(iv), it was submitted
that the order passed under Section 16 of the Arbitration Act is a
complete answer to the same. There is no question of there being
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any defect in the constitution of the arbitral tribunal, for the
simple reason that the learned arbitrator applied the only
arbitration clause that could apply to the dispute that arose
between the parties. The aforesaid clause stipulated that a sole
arbitrator and the place of arbitration as Mumbai. Therefore, the
insistence of the petitioner that an arbitral tribunal of three
members at Bengaluru ought to have been constituted is wholly
without any substance.
25. On the question of non-arbitrability of the dispute, it was
submitted that the allegations of fraud, forgery and fabrication
made by the petitioner were clearly an afterthought. The
arbitrator discussed the aforesaid aspect in detail in the impugned
arbitral award. The position of law in this regard was correctly
applied. Reference was made to judgments of the Supreme Court
and this Court on the aforesaid aspect to conclude that, if such an
objection on the ground of fraud and allegations, regarding
criminal activities was raised only as a pretext to avoid arbitration,
the same was required to be shot down by the arbitrator. The
approach of the arbitrator was clearly in consonance with the
position of law and hence, no error could be attributed to the
learned arbitrator in that regard.
26. As regards scope of interference in an arbitral award under
Section 34 of the Arbitration Act and reliance placed on the
aforesaid judgments by the learned counsel appearing for the
petitioner, it was submitted that there can be no quarrel with the
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position of law laid down therein, but it would inure to the benefit
of the respondents rather than the petitioner. It was submitted that
the arbitrator was alive to the position of law with regard to the
manner in which the disputes referred to arbitration were to be
decided and hence, none of the grounds raised on behalf of the
petitioner justify interference with the arbitral award. As regards
the ground under Section 34(2)(b)(ii) of the Arbitration Act, it was
submitted that there was nothing to indicate any error on the part
of the arbitrator and that it could not be said that the respondents
had taken advantage of their own "illegal acts". On this basis, it
was submitted that the petition deserved to be dismissed.
27. This Court has considered the rival submissions. The scope
of interference under Section 34 of the Arbitration Act is
necessarily limited to the grounds specifically enumerated under
the said provision. On behalf of the petitioner, specific clause of
the said provision has been invoked in order to demonstrate that
the impugned arbitral award deserves interference. This Court has
considered the material on record in that perspective.
28. A frontal attack has been launched on behalf of the
petitioner on the procedure adopted by the learned arbitrator,
while dealing with the application under Section 17 of the
Arbitration Act. It is claimed that the application was deferred in
the first instance and therefore, it was rejected, thereby preventing
the petitioner from properly presenting his case before the learned
arbitrator. A perusal of the prayer made on behalf of the petitioner
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in the application under Section 17 of the Arbitration Act would
show that he was insisting upon a direction to the respondents to
place on record a table giving the details of each transaction
between the parties, including the date of transfer, method of
transfer, the number of cheques/instruments/modes of such
transfer, bank account number and the amounts transferred. The
learned arbitrator passed an order on 21 st December 2020,
deferring decision on the said application, observing that the
petitioner could cross-examine witnesses of the respondents in
respect of the transactions as the affidavits-in-lieu of examination-
in-chief were already on record. It was also observed that an
appropriate inference could be drawn on the basis of the answers
given by the witnesses during cross-examination. Subsequently, by
an order dated 30th March 2021, the learned arbitrator rejected
the application under Section 17 of the Arbitration Act. This was
after the evidence of the witnesses was over. In this order, the
learned arbitrator observed that fullest opportunity was given to
the petitioner to cross-examine the witnesses when numerous
questions were put and in such a situation, the petitioner could
not be permitted to fill lacuna.
29. In that context, much emphasis was placed on behalf of the
petitioner, on the manner in which the learned arbitrator
conducted the evidence and the manner in which cross-
examination of the witnesses was undertaken. Although,
allegations have been made that certain vital questions were not
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permitted, this Court is of the opinion that the petitioner in this
context has not been able to demonstrate how he was prevented
from placing his case before the learned arbitrator. The insistence
on his part of information and details of transactions being placed
by the respondents in the form of a table before the learned
arbitrator, appears to be misplaced in the light of the entirety of
the material and documents on record. While there can be no
dispute about the fact that the respondents as the original
claimants were required to stand on their own legs and to
demonstrate that they had transferred the aforesaid amount of
Rs.18 crores into the account of the petitioner, at the same time,
the petitioner could not have insisted upon the mode and manner
of proof of such transfer by the respondents.
30. In this context, the findings rendered by the learned
arbitrator in paragraph 17.10, assumes significance. In this
paragraph, the learned arbitrator has referred to the specific bank
account number of Allahabad Bank, Andheri Branch, of the
petitioner and the manner in which the amounts were transferred
by the respondents into that bank account of the petitioner. The
learned arbitrator has also referred to the certificate issued by the
said bank (exhibit 'C' - 43), proving that cheques pertaining to the
amounts were actually credited into the bank account of the
petitioner. Once such material was placed on record and
appreciated by the learned arbitrator to reach positive findings in
favour of the respondents, the petitioner cannot claim that a
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procedure infirmity had occurred, preventing him from presenting
his case before the learned arbitrator. In fact, it was the case of the
respondents that they had transferred specific amounts under the
SDA with the petitioner and it was for them to prove that such
transfers had taken place. The petitioner could never be expected
to prove the negative. The prayer in the application under Section
17 of the Arbitration Act was for a direction to the respondents to
produce material, proving such transfer of amounts. So long as the
respondents placed cogent material in the form of details of bank
account of the petitioner, details of the cheques through which
payments were made and even certificate issued by the bank,
acknowledging such transfer of amounts was produced, it cannot
be said that a procedural infirmity occurred while dealing with the
application under Section 17 of the Arbitration Act, giving rise to
a ground under Section 34(2)(a)(iii) of the Arbitration Act,
pertaining to the petitioner being prevented from presenting his
case before the learned arbitrator. This Court finds no substance in
the said ground raised on behalf of the petitioner and the hence,
the same is rejected.
31. As regards ground under Section 34(2)(a)(iv) of the
Arbitration Act, this Court agrees with the contentions raised on
behalf of the respondents that since the specific claim of the
respondents was based on the final agreement dated 15 th
November 2017, regarding acknowledgment on the part of the
petitioner about failure to abide by the obligations to refund
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amount of Rs.18 crores, the dispute should only be limited to the
said aspect of the matter and the learned arbitrator indeed decided
only the said dispute. The entire attempt on the part of the
petitioner appears to be to mix up the transactions and mutual
obligations pertaining to independent transactions to somehow
demonstrate that the learned arbitrator rendered decisions on
disputes that were beyond the scope of the arbitral proceedings. It
is a matter of record that even while invoking arbitration, the
respondents specifically claimed refund of amounts that were
deposited with the petitioner amounting to Rs.18 crores, with
specific reference to the final agreement dated 15 th November
2017. The learned arbitrator was alive to this situation and hence,
he proceeded to render decision only with regard to the aforesaid
dispute. Hence, no case is made out under Section 34(2)(a)(iv) of
the Arbitration Act and the contentions raised on that regard on
behalf of the petitioner are rejected.
32. As regards ground raised under Section 34(2)(a)(v) of the
Arbitration Act, the same also pertains to the contentions raised on
behalf of the petitioner with regard to the manner in which the
learned arbitrator rejected the application filed under Section 16
of the Arbitration Act The petitioner had specifically placed
reliance on the development agreement dated 11 th November
2015 and the SDA dated 12 th November 2015 to claim that the
arbitration clause under the said two agreements mandated
constituting an arbitral tribunal of three members with the place of
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arbitration being Bengaluru. On this basis, the very jurisdiction of
the learned arbitrator to enter upon reference and conducting the
arbitral proceedings at Mumbai was challenged.
33. In this context, it would be necessary to refer to the final
agreement dated 15th November 2017 executed between the
parties. A perusal of the same shows that the parties referred to
the development agreement dated 11 th November 2016, EMCA
dated 11th November 2015, as also the SDA dated 12 th November
2017 and after recording acknowledgment on the part of the
parties about the obligations, including the liability of the
petitioner to pay amount of Rs.18 crores, stipulated that the
disputes would be resolved with regard the said final agreement on
the basis of arbitration clause contained in the EMCA. Clause 9
pertaining to resolution of disputes contained under the final
agreement dated 15th November 2017, clearly records the said
stipulation.
34. Clause 10.6 of the EMCA dated 11th November 2015,
specifically stipulated that arbitration proceedings would be
conducted by a sole arbitrator and that the seat of the arbitration
would be Mumbai. In this context, the notice dated 29 th July 2020
issued by the respondents to the petitioner also needs to be
perused. It shows that after referring to the liability of the
petitioner to repay the amount of Rs.18 crores deposited as
security deposit by the respondents, in paragraph 17 specific
reliance was placed on clause 9 of the final agreement dated 15 th
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November 2017 read with clause 10.6 of the EMCA dated 11 th
November 2015, while invoking arbitration. In paragraph 19, the
respondents specifically appointed/nominated the sole arbitrator at
Mumbai for resolution of the dispute. A perusal of the reply sent
on behalf of the petitioner dated 6 th August 2020, shows that the
petitioner did not raise any objection, either with regard to the
appointment/nomination of the sole arbitrator or the place of the
arbitration being Mumbai. In fact, the petitioner stated that he
would willingly participate in the arbitration before the sole
arbitrator, subject to his right to challenge the agreements and
availing remedies under criminal law for cheating, forgery and
breach of trust. Thus, at the first opportunity available to the
petitioner, no such objection with regard to the constitution of the
arbitral tribunal or the place of arbitration was raised on behalf of
the petitioner. Therefore, the objection raised under Section 16 of
the Arbitration Act and the ground now raised under Section 34(2)
(a)(v) of the Arbitration Act, is nothing but an afterthought on the
part of the petitioner. In any case, the clause 9 of the final
agreement dated 15th November 2017 read with clause 10.6 of the
EMCA dated 11th November 2015 clearly demonstrate that there
can be no fault found with the constitution of the arbitral tribunal
or the place of arbitration in the facts of the present case.
Therefore, the aforesaid contentions raised on behalf of the
petitioner are rejected.
35. The petitioner has specifically raised a ground of non-
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arbitrability of the disputes between the parties, emphasizing upon
the alleged fraud, forgery and fabrication committed by the
respondents. It is alleged that since such questions arose between
the parties, the disputes could not have been resolved through
arbitration.
36. The basis for raising the aforesaid ground appears to be the
filing of criminal proceedings at the behest of the petitioner
against the respondents. In this context, the chronology of events
assumes significance. The first point in time when the petitioner
made allegation of criminal liability concerning fraud, forgery and
fabrication against the respondents was when FIR dated 31 st
October 2020 was caused to be registered at Vidyaranyapura
Police Station, Bengaluru City, bearing No. 0196 of 2020 for
offences under Sections 406, 420 and 506 read with 34 of the
IPC. The petitioner also filed a private complaint against the
respondents before the Additional Chief Metropolitan Magistrate,
Bengaluru on 18th March 2021, by which time, the arbitration
proceedings were well underway. The allegations in the said
complaint reiterated the stand taken on behalf of the petitioner,
which had led to registration of the FIR dated 31st October 2020.
37. It is relevant to note that the allegations made in these
criminal proceedings, all pertained to fraud, forgery and
fabrication on the part of the respondents in the context of the
aforementioned agreements executed between the parties. It is a
matter of record that the development agreement and the EMCA
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were executed on 11th November 2015, SDA was executed on 12 th
November 2015 and the final agreement was executed on 15 th
November 2017. The FIR was registered more than five years
after the development agreement, EMCA and the SDA. It was
registered about three years after execution of the final agreement.
These dates clearly demonstrate that the petitioner launched the
criminal proceedings as an afterthought and that in any case, such
proceedings suffered from delay of three to five years. The learned
arbitrator took into consideration the said aspect of the matter
specifically in paragraphs 17.11 to 17.16 of the arbitral award.
The learned arbitrator correctly took into consideration the fact
that the petitioner is an Engineer from Bengaluru University,
holding qualification of B.E. (Civil) in English medium and that
the material on record demonstrated that he was in business since
1994-1995, owning and controlling business not only in India, but
also in the United States of America (USA), where he had
employed citizens of the USA and he had also appointed attorney
on his behalf. It is inexplicable how such a person was unable to
realize that the respondents had committed fraud and forgery
upon him and that they had indulged in fabrication for a long
period of three to five years. It was only after the respondents
raised their claims and disputes arose between the parties that the
petitioner seems to have turned around to claim that he was
cheated and that the respondents had indulged in fraud, forgery
and fabrication.
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38. The position of law was also correctly appreciated by the
learned arbitrator by referring to judgment of the Supreme Court
in the case of Abdul Kadir Shamsuddin Bubere v/s. Madhav
Prabhakar Oak & Anr., AIR 1962 SC 406 , wherein it was held
that if the objection of fraud and criminal proceeding was raised
only as a pretext to avoid arbitration, the arbitral proceedings
would not be jeopardized and the dispute could certainly be
resolved by arbitration. The learned arbitrator also referred to
subsequent judgments of the Supreme Court in the cases of A.
Ayyasamy v/s. A. Paramasivam & Ors., (2016) 10 SCC 386 and
Amit Lalchand Shah & Ors. v/s. Rishabh Enterprises & Anr.,
(2018) 15 SCC 678, which reiterated the said position of law.
39. This Court finds no error in the said findings rendered by
the learned arbitrator and hence, the petitioner cannot claim that
the impugned arbitral award deserves to be set aside as non-
arbitrable disputes were considered and decided by the learned
arbitrator in his arbitral award. The said ground raised on behalf
of the petitioner is also rejected.
40. Much emphasis was placed on behalf of the petitioner on
the "statement of amounts receivable", which was a document
referred to in the final agreement dated 15 th November 2017
executed between the parties. It was claimed that the said
document being completely ignored vitiated the findings of the
learned arbitrator. It was alleged that relevant materials were
ignored. On this basis, Section 34(2)(b)(ii) of the Arbitration Act
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was invoked, which pertains to the arbitral award being in
contravention of the fundamental policy of Indian law. Reliance
was also placed on judgments of the Supreme Court in the cases of
Oil and Natural Gas Corporation Limited v/s. Western Geco
International Limited (supra), Ssangyong Engineering and
Constructions Company Limited v/s. National Highways
Authority of India (NHAI) (supra) and Associate Builders v/s.
Delhi Development Authority (supra) to claim that the most
crucial document in the present case was ignored and hence, the
fundamental policy of Indian law was violated.
41. This Court is unable to appreciate the said contention raised
on behalf of the petitioner, for the reason that the aforesaid
document titled as "statement of amounts receivable", in no
manner demonstrates that the petitioner could escape his liability
of refunding the amount of Rs.18 crores along with interest, as
agreed between the parties. The final agreement dated 15 th
November 2017 shows that by the time the said agreement was
executed, the petitioner acknowledged the fact that he was unable
to abide by his obligations. It is crucial to note that in the
interregnum, he had also executed an equitable mortgage by
deposit of title deeds on 28th March 2017, being another factor
showing acknowledgment on his part about default in the context
of the refundable deposit of Rs.18 crores made by the
respondents. As noted herein above, the respondents were able to
prove to the hilt about having transferred the said amount of
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Rs.18 crores into the bank account of the petitioner. In the face of
such material and the inability of the petitioner to give any
plausible explanation as to how he was not liable to refund the
said amount as per the terms agreed between the parties, pointing
towards the aforesaid document titled as "statement of amounts
receivable", would not be of any consequence. It cannot be said
that the learned arbitrator violated the fundamental policy of
Indian law. As a matter of fact, the position of law clarified by the
Supreme Court in the aforementioned judgments shows that the
Court under Section 34 of the Arbitration Act does not sit an
appeal over the award and the findings rendered therein. It is for
the petitioner challenging the award to demonstrate how any of
the specific grounds enumerated under Section 34 of the
Arbitration Act are made out for the Court to assume jurisdiction
to interfere with the arbitral award. This Court is of the opinion
that the petitioner in the present case has failed to make out any
such ground and therefore, no case is made out for interference
with the arbitral award This Court also finds that the petitioner
miserably failed to support his case pertaining to the counter-claim
and therefore, no error can be attributed to the learned arbitrator
in rendering findings against the petitioner in the arbitral award.
42. It is a settled position of law that a Court would not lightly
interfere with an arbitral award and that unless the petitioner is
able to make out a specific ground under Section 34 of the
Arbitration Act, the Court would not interfere with the arbitral
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award. A perusal of the arbitral award in the present case shows
that the learned arbitrator appreciated the entire material as well
as oral and documentary evidence on record in the correct
perspective and rendered cogent findings, leading to the claim of
the respondents being allowed and the counter-claim of the
petitioner being rejected.
43. In view of the above, the petition is dismissed.
44. Pending applications, if any, also stand disposed of.
MANISH PITALE, J.
