Karnataka High Court
M/S. Orange Self Storage Private ... vs Sri. Abhayaraj Shetty on 3 February, 2025
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CMP No.41 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 3RD DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
CIVIL MISC. PETITION NO.41 OF 2023
BETWEEN:
M/S. ORANGE SELF STORAGE PRIVATE LIMITED
HAVING ITS REGISTERED OFFICE AT
NO.107, ANDREW BUILDING
M.G. ROAD
BENGALURU - 560 001.
REPRESENTED BY ITS DIRECTOR
MR. GANAPATHI MALA JOSHY.
...PETITIONER
(BY SRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SRI. SIDDHARTH SUMAN, ADVOCATE)
AND:
1. SRI. ABHAYARAJ SHETTY
S/O LATE SHRI B. RAMANATH SHETTY
'PRAKRUTI', RAGHUVANAHALLI VILLAGE
UTTARAHALLI
BANGALORE SOUTH TALUK
BENGALURU - 560 061.
ALSO AT:
NO.24, MN KRISHNA RAO ROAD
BASAVANAGUDI, BENGALURU SOUTH
BENGALURU - 560 064.
2. SRI. SANJAY SHETTY
S/O LATE SHRI B. RAMANATH SHETTY
'PRAKRUTI', RAGHUVANAHALLI VILLAGE
UTTARAHALLI
BANGALORE SOUTH TALUK
BENGALURU - 560 061.
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CMP No.41 of 2023
ALSO AT:
NO.24, MN KRISHNA RAO ROAD
BASAVANAGUDI, BENGALURU SOUTH
BENGALURU - 560 064.
3. SMT. JYOTHI
w/o LATE SHRI B. RAMANATH SHETTY
'PRAKRUTI', RAGHUVANAHALLI VILLAGE
UTTARAHALLI
BANGALORE SOUTH TALUK
BENGALURU - 560 061.
ALSO AT:
NO.24, MN KRISHNA RAO ROAD
BASAVANAGUDI, BENGALURU SOUTH
BENGALURU - 560 064.
...RESPONDENTS
(BY SRI. D.R. RAVISHANKAR, SENIOR ADVOCATE FOR
SRI. RAVINDRA PRASAD B., ADVOCATE)
THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(5)
OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING
TO APPOINT SRI. S.R. SOMASHEKARA, RETIRED DISTRICT
AND SESSIONS JUDGE, ARBITRATION CENTRE, KARNATAKA
(DOMESTIC AND INTERNATIONAL), RACE COURSE ROAD,
BENGALURU - 560 001 AS ARBITRATOR TO ENTER UPON
REFERENCE AND PASS AWARD IN THE MATTER OF DISPUTES
BETWEEN THE PETITIONER ON THE ONE SIDE AND THE
RESPONDENTS ON THE OTHER SIDE AS PER CLAUSE 4(A) OF
THE ADDENDUM OF LEASE DEED DATED 27.08.2020 I.E.
ANNEXURE-C.
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 24.01.2025, THIS DAY ORDER WAS
PRONOUNCED THEREIN, AS UNDER:
CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
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CMP No.41 of 2023
CAV ORDER
This Civil Miscellaneous Petition is filed under Section
11(6) of the Arbitration and Conciliation Act, 1996 (for
short 'the Act') seeking appointment of sole Arbitrator to
resolve the dispute between the parties in terms of an
Addendum to lease deed dated 27.08.2020 evidenced at
Annexure-C.
2. After receipt of notice, the respondents
tendered appearance through learned counsel.
3. The petitioner states that it has leased a
commercial space measuring 33,227 sq.ft. in the building
known as 'Nitesh Ceaser's Palace' under a lease deed
dated 01.06.2017, executed by Late B. Ramanath Shetty
and M/s.NEL Holdings South Limited. The lease
agreement, supplemented by a supplementary agreement
dated 16.06.2020 and an addendum dated 27.08.2020,
remains valid for 15 years from the amended
commencement date.
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CMP No.41 of 2023
4. Referring to the aforementioned lease
documents, petitioner asserts that the developer, M/s. NEL
Holdings South Limited, executed a Memorandum of
Understanding (MoU) on 15.01.2018, granting the
petitioner the 'right of first refusal' should the developer
intend to sell a portion of the schedule premises. The
petitioner alleges that representatives of the respondents
have been obstructing access to the premises and
preventing its employees from entering. Consequently, a
legal notice was issued on 12.12.2022, invoking the
arbitration clause stipulated in Clause 4 of the Addendum
dated 27.08.2020 and nominating an arbitrator.
5. This civil miscellaneous petition is filed alleging
that respondents have defaulted in not complying with the
conditions of lease deed dated 01.06.2017, supplementary
agreement dated 16.06.2020 and Addendum to lease deed
dated 27.08.2020.
6. Learned Senior Counsel appearing for the
petitioner has taken this Court through the relevant
clauses in Addendum and would submit that in case there
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CMP No.41 of 2023
is a dispute, there is a clear clause providing that all
disputes have to be resolved by referring to a sole
Arbitrator.
7. In support of his contention, learned Senior
Counsel has placed reliance on the following judgments:
1) Duro Felguera,S.A. vs. Gangavaram Port Limited -
(2017) 9 SCC 729
2) Mayavati Trading Private Limited vs. Pradyuat Deb
Burman - (2019) 8 SCC 714
3) National Insurance Company Limited vs. Boghara
Polyfab Private Limited - (2009) 1 SCC 267
4) Ameet Lalchand Shah and Others vs. Rishabh
Enterprises and Another - (2018) 15 SCC 678
5) Sunder Kukreja and Others vs. Mohan Lal Kukreja and
Another - (2009) 4 SCC 585
6) Swiss Timing Limited vs. Commonwealth Games 2010
Organising Committee - (2014) 6 SCC 677
7) Hema Khattar and Another vs. Shiv Khera - (2017) 7
SCC 716
8. Per contra, learned Senior Counsel for the
respondents contends that all the documents relied upon
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CMP No.41 of 2023
by the petitioner, including the lease deed dated
01.06.2017, the supplementary agreement dated
16.06.2020, and the addendum to the lease deed dated
27.08.2020, are seriously disputed. In particular, the
execution and validity of these documents are challenged.
Drawing the Court's attention to the General Power of
Attorney (GPA), the learned Senior Counsel argues that
M/s. NEL Holdings South Limited, which holds a substantial
stake in the petitioner's company, cannot invoke the
arbitration clause by relying on the doctrine of the 'group
of companies.' In support of this contention, reliance is
placed on the judgment of the Hon'ble Supreme Court
in Cox and Kings Limited v. SAP India Private
Limited & Another, reported in AIR Online 2022 SC
637.
9. Learned Senior Counsel further submits that
various documents indicate that M/s. NEL Holdings South
Limited holds a 99% share in the petitioner's company.
Consequently, there exists a bar under the GPA preventing
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CMP No.41 of 2023
the petitioner from raising any dispute against the
respondents, who are the owners of the land.
10. Heard the learned Senior Counsel for the
petitioner and the learned Senior Counsel for the
respondents.
11. The respondents have raised several
contentious issues, including the very existence of the
arbitration agreement by disputing the validity of the lease
deed, the supplementary agreement, and the addendum
to the lease deed. The respondents' contention that Mr.
Nitesh Shetty, who holds a substantial stake in the
petitioner's company and is also the Director of M/s. NEL
Holdings South Limited, controls both entities and,
therefore, the petitioner, as part of the same group,
cannot invoke the arbitration clause, is an issue that falls
within the domain of the Arbitrator. Additionally, the
respondents' denial of the authenticity of crucial
documents further necessitates adjudication by the
Arbitrator.
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CMP No.41 of 2023
12. The question of whether Mr. Nitesh Shetty holds
a 99% share and exercises control over the petitioner's
company is also a matter requiring adjudication by the
Arbitrator. The respondents' assertion that the lease deed,
the supplementary agreement, and the addendum are
merely paper transactions, that no physical possession of
the premises was handed over, and that the petitioner is a
shell company of M/s. NEL Holdings South Limited involve
complex factual determinations that must be resolved
through arbitration.
13. However, upon a thorough review of the
petition and the annexed documents, this Court is satisfied
that the petitioner has fulfilled the procedural
requirements under Section 11(4) of the Arbitration and
Conciliation Act.
14. In the light of aforesaid clause of arbitration
and contentions advanced by petitioner and respondents,
this Court proceeds to pass the following:
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CMP No.41 of 2023
ORDER
(i) Civil Miscellaneous Petition is allowed
appointing Sri. Justice A.V.Chandrashekar,
Former Judge, High Court of Karnataka as the
sole Arbitrator to enter reference of the disputes
between the petitioner and the respondents and
conduct proceeding at the Arbitration and
Conciliation Centre (Domestic and International),
Bengaluru according to the Rules governing the
said Arbitration Centre;
(ii) All contentions inter se parties are left
open for adjudication in the arbitration
proceedings;
(iii) Office is directed to communicate this
order to the Arbitration and Conciliation Centre
and to Sri. Justice A.V.Chandrashekar, Former
Judge, High Court of Karnataka, as required
under the Arbitration and Conciliation Centre
Rules, 2012.
SD/-
(SACHIN SHANKAR MAGADUM)
JUDGE
CA
