Karnataka High Court
The Karnataka Urban Housing ... vs Hanumantharaya on 24 July, 2025
Author: Hanchate Sanjeevkumar
Bench: Hanchate Sanjeevkumar
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MFA No. 6720 of 2016
C/W MFA No. 2962 of 2016
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF JULY, 2025
BEFORE
THE HON'BLE MR. JUSTICE HANCHATE SANJEEVKUMAR
MISCELLANEOUS FIRST APPEAL NO.6720 OF 2016 (AA)
C/W
MISCELLANEOUS FIRST APPEAL NO.2962 OF 2016 (AA)
IN MFA NO. 6720 OF 2016:
BETWEEN:
THE KARNATAKA URBAN HOUSING
CO-OPERATIVE SOCIETY LTD.,
NO.352, 3RD A CROSS,
2ND STAGE, 3RD PHASE,
WEST OF CHORD ROAD,
BENGALURU-79,
REP. BY SECRETARY.
... APPELLANT
(BY SRI S.R.HEGDE HUDLAMANE, ADVOCATE)
AND:
1. HANUMANTHARAYA
S/O LATE THIMMARAYAPPA,
Digitally AGED ABOUT 76 YEARS,
signed by R/O: NO.4, 3RD MAIN ROAD,
RAMYA D
10TH CROSS, AGRAHARADASARAHALLI,
Location:
HIGH BENGALURU-560 079.
COURT OF
KARNATAKA SURESH
S/O LATE MAHESHWARAIAH,
SINCE DECEASED BY HIS LR'S.,
2. SMT. MANGALA GOWRAMMA
W/O LATE SURESH,
AGED ABOUT 57 YEARS,
3. SRI. HARISH S/O LATE SURESH,
AGED ABOUT 40 YEARS,
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4. USHA D/O LATE SURESH,
AGED ABOUT 38 YEARS,
NAGARAJ
SINCE DECEASED BY HIS LR'S.,
5. SMT. VANAJA W/O LATE NAGARAJ,
AGED ABOUT 57 YEARS,
6. SRI. KARTHIK S/O LATE NAGARAJ,
AGED ABOUT 39 YEARS,
REP. BY ITS GPA HOLDER NO.5 ABOVE.
7. KAVYA D/O LATE NAGARAJ,
AGED ABOUT 57 YEARS,
8. CHENNEKESHAVA
S/O LATE MAHESHWARAIAH,
SINCE DECEASED BY HIS LR'S.,
SMT. SHANTHAMMA
W/O LATE CHENNAKESHAV,
AGED ABOUT 56 YEARS,
9. SRI. C. NAGARATHNA
D/O LATE CHENNAKESHAVA,
AGED ABOUT 29 YEARS,
10. SRI. C. JAYANTHI
D/O LATE CHENNAKESHAVA,
AGED ABOUT 27 YEARS,
RAVI S/O MAHESHWARAIAH,
SINCE DECEASED BY HIS LR'S.,
11. SMT. SAROJA W/O LATE RAVI,
AGED ABOUT 47 YEARS,
12. SUHAS S/O LATE RAVI,
AGED ABOUT 22 YEARS,
13. JITHEEN S/O LATE RAVI,
AGED ABOUT 20 YEARS,
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MFA No. 6720 of 2016
C/W MFA No. 2962 of 2016
HC-KAR
ALL THE RESPONDENTS NO.2 TO 13 ARE
RESIDING AT NO.23, 4TH MAIN ROAD,
10TH CROSS, AGRAHARADASARAHALLI,
BENGALURU-560 079.
14. SMT. LAKSHMAMMA
W/O LATE T. CHANDRAPPA,
AGED ABOUT 68 YEARS,
15. YATHISH S/O LATE CHANDRAPPA,
AGED ABOUT 55 YEARS,
16. SRI. RAGAVENDRA
S/O LATE T. CHANDRAPPA,
AGED ABOUT 53 YEARS,
17. SRI. THIMMARAYAGOWDA @ MAHESH
S/O LATE T. CHANDRAPPA,
AGED ABOUT 40 YEARS,
RESPONDENT NOS.13 TO 17 ARE
RESIDING AT NO.4, 3RD MAIN ROAD,
10TH CROSS, AGRAHARADASARAHALLI,
BENGALURU-560 079.
18. THE ARBITRATOR,
SRI. V.R. RAMASWAMY IYANAGAR,
ADVOCATE, NO.209, RAJA SNOW BUILDING,
S.C. ROAD, SESHADRIPURAM,
BENGALURUR-560 020.
19. SMT. SHANTHAMMA
WIDOW OF LATE KRISHNAPPA,
AGED ABOUT 73 YEARS,
20. SRI. B.K. SRINIVASA
S/O LATE KRISHNAPPA,
AGED ABOUT 40 YEARS,
BOTH ARE R/O: GURUSWAMY NILAYA,
NO.1025/13, 11TH MAIN, HAMPI NAGARA,
BENGALURU-560 104.
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21. SMT. BHARATHI D/O LATE A. KRISHNAPPA,
W/O SRI. VASUDEVA MURTHY,
AGED ABOUT 46 YEARS,
R/O: NO.1227/68, IST MAIN ROAD,
MRCR EXTENSION, VIJAYANAGARA,
BENGALURU-79.
22. SMT. SUMITHRA W/O DR. KEMPARAJ,
AGED ABOUT 48 YEARS,
R/O: NO.20, 515,
ABW LAYOUT, 2RD CROSS,
HAL 3RD STAGE, NEW THIPPASANDRA,
BENGALURU-560 075.
... RESPONDENTS
(BY SRI. M.J. ALVA, ADVOCATE FOR R1-R9, R11, R14-R17
AND R10, R12, R13, R18 ARE SERVED;
SRI. RAMESHA K.R., ADVOCATE FOR R19 TO R22)
THIS MFA IS FILED UNDER SECTION 37(1)(C) OF
ARBITRATION AND CONCILIATION ACT, PRAYING TO SET
ASIDE THE IMPUGNED JUDGMENT DATED 20.02.2016 PASSED
IN A.C. NO.76/1999 ON THE FILE OF THE LEARNED LII ADDL.
CITY CIVIL AND SESSIONS JUDGE, AT BENGALURU CITY (CCH-
53).
IN MFA NO.2962 OF 2016:
BETWEEN:
1. HANUMANTHARAYA
S/O LATE THIMMARAYAPPA
AGED ABOUT 67 YEARS,
R/AT: NO.4, 3RD MAIN ROAD,
10TH CROSS, AGRAHARADASARAHALLI,
BENGALURU-560 079.
2. SURESH S/O LATE MAHESHWARAIAH,
SINCE DEAD BY HIS LR'S.,
2A. SMT. MANGALA GOWRAMMMA
W/O LATE SURESH,
AGED ABOUT 50 YEARS,
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2B. HARISH S/O LATE SURESH,
AGED ABOUT 32 YEARS,
2C. USHA D/O LATE SURESH,
AGED ABOUT 30 YEARS
3. NAGARAJ SINCE DEAD BY HIS LR'S.,
SMT. VANAJA W/O LATE NAGARAJ,
3A. AGED ABOUT 50 YEARS,
3B. KARTHIK S/O LATE NAGARAJ,
AGED ABOUT 31 YEARS,
3C. KAVYA D/O LATE NAGARAJ,
AGED ABOUT 28 YEARS
4. CHENNAKESHAVA
S/O LATE MAHESHWARAIAH,
SINCE DEAD BY HIS LR'S.,
4A. SMT. SHANTHAMMA
W/O LATE CHENNAKESHAVA,
AGED ABOUT 39 YEARS,
4B. C. NAGARATHNA
D/O LATE CHENNAKESHAVA,
AGED ABOUT 20 YEARS,
4C. C. JAYANTHI
D/O LATE CHENNAKESHAVA,
AGED ABOUT 18 YEARS,
APPELLANTS NO.4(B) AND (C) ARE
MINORS AND THEY REPRESENTED
BY THEIR MOTHER GUARDIAN
APPELLANT NO.4(A).
5. RAVI S/O MAHESHWARAIAH,
SINCE DEAD BY HIS LR'S.,
5A. SMT. SAROJA W/O LATE RAVI,
AGED ABOUT 35 YEARS,
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5B. SUHAS S/O LATE RAVI,
AGED ABOUT 15 YEARS,
5C. JITHEEN S/O LATE RAVI,
AGED ABOUT 12 YEARS,
APPELLANTS NO.5(B) AND (C) ARE
MINORS AND THEY REPRESENTED
BY THEIR MOTHER AND NATURAL GUARDIAN
APPELLANT NO.5(A).
ALL THE APPELLANTS NO.2(A) TO 5(C)
ARE RESIDING AT NO.23, 4TH MAIN ROAD,
10TH CROSS, AGRAHARADASARAHALLI,
BENGALURU-560 079.
6. SMT. LAKSHMAMMA
W/O LATE T. CHANDRAPPA,
AGED ABOUT 58 YEARS,
7. YATHISH S/O LATE CHANDRAPPA,
AGED ABOUT 38 YEARS,
8. RAGAVENDRA S/O LATE CHANDRAPPA,
AGED ABOUT 36 YEARS,
9. THIMMARAYAGOWDA @ MAHESH
S/O LATE CHANDRAPPA,
AGED ABOUT 34 YEARS,
APPELLANT NOS. 6 TO 9 ARE
R/A: NO.4, 3RD MAIN ROAD,
10TH CROSS, AGRAHARADASARAHALLI,
BENGALURU-560 079.
... APPELLANTS
(BY SRI. M.J. ALVA, ADVOCATE)
AND:
1. KRISHNAPPA
SINCE DEAD BY HIS LR'S.,
1A. SMT. SHANTHAMMA
W/O LATE A. KRISHNAPPA,
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MFA No. 6720 of 2016
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AGED ABOUT 71 YEARS,
NO.1025/13, 'GURUSWAMY NIVASA'
11TH MAIN, HAMPINAGARA,
BENGALURU-560 104.
1B. B.K. SRINIVASA
S/O LATE A. KRISHNAPPA,
AGED ABOUT 40 YEARS,
NO.1025/13, 'GURUSWAMY NIVASA'
11TH MAIN, HAMPINAGARA,
BENGALURU-560 104.
1C. SUMITHRA
D/O LATE A. KRISHNAPPA,
W/O DR. KEMPARAJ,
AGED ABOUT 48 YEARS
NO.20, 515, ABW LAYOUT,
2ND CROSS, HAL 3RD STAGE,
NEW THIPPASANDRA,
BENGALURU-560 075.
1D. SMT. BHARATHI
D/O LATE A. KRISHNAPPA
W/O MR. VASUDEVA MURTHY,
AGED ABOUT 46 YEARS,
NO.1227/68, 1ST MAIN ROAD,
MRCR EXTENSION, VIJAYANAGAR,
BENGALURU-560 040.
2. THE ARBITRATOR
SRI. V.R. RAMASWAMY IYANGAR,
ADVOCATE, NO.209,
RAJA SNOW BUILDING,
S.C. ROAD, SESHADRIPURA,
BENGALURU-560 020.
... RESPONDENTS
(BY SRI. RAMESHA K.R., ADVOCATE FOR PROPOSED R1(A-D);
R2-SERVED)
THIS MFA IS FILED UNDER SECTION 37(1)(B) OF
ARBITRATION AND CONCILIATION ACT, PRAYING TO SET
ASIDE THE IMPUGNED JUDGMENT DATED 20.02.2016 PASSED
IN A.C. NO.76/1999 ON THE FILE OF THE LEARNED LII ADDL.
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MFA No. 6720 of 2016
C/W MFA No. 2962 of 2016
HC-KAR
CITY CIVIL AND SESSIONS JUDGE, AT BENGALURU CITY (CCH-
53) AND REVERSE THE FINDINGS BY SETTING ASIDE THE
AWARD DATED 08.02.1999 PASSED IN AC NO.76/1999 BY THE
LEARNED ARBITRATOR/RESPONDENT NO.2 AND DECREE THE
SUIT FILED BY THE APPELLANTS ON THE FILE OF THE LII
ADDL. CITY CIVIL AND SESSIONS JUDGE, AT BENGALURU CITY
(CCH-53).
THESE APPEALS ARE HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, JUDGMENT IS
DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE HANCHATE SANJEEVKUMAR
CAV JUDGMENT
MFA No.6720/2016 is filed by the Karnataka Urban
Housing Co-Operative Society Ltd., and MFA
No.2962/2016 is filed by the owner of land challenging the
order dated 20.02.2016 passed in A.C.No.76/1999 on the
file of LII Additional City Civil and Sessions Judge,
Bengaluru City (CCH-53)1, thereby, the Arbitration Suit
filed under Section 34 of the Arbitration and Conciliation
Act, 19962 is dismissed.
(hereinafter referred to as 'the City Civil Court' for short)
(hereinafter referred to as 'the Act, 1996' for short)
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2. For the sake of convenience and easy
reference, the parties are referred to as per their rankings
before the Arbitration suit.
Brief facts of the cases are:
3. It is stated that the plaintiffs are the absolute
owners and in possession of the non-agricultural land
bearing Sy.No.69/2-A measuring 2 acres 20 guntas,
situated at Agradasarahalli, Yeshwanthapura Hobli,
Bangalore. One Thimmarayappa, who is the father of
plaintiff No.1, grandfather of plaintiff Nos.2 to 5, 7 to 9
and father-in-law of plaintiff No.6 had purchased the land
bearing Sy.No.69/2, measuring 4 acres 26 guntas from
one Annayappa through registered sale deed dated
22.10.1953. During his lifetime, he has sold 16 guntas of
land and the remaining land was 3 acre 10 guntas. He died
on 21.04.1984 leaving behind three sons namely
Maheswaraiah, T Hanumantharaya and T Chandrappa.
Maheswaraiah died leaving behind his sons, plaintiff Nos.2
to 5 namely Hanumantharaya (plaintiff No.1) and T
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Chandrappa. Plaintiff No.6 is the wife of late T
Chandrappa. Thus, all the plaintiffs are owners and having
right, title and interest over the suit schedule properties.
During the lifetime of Thimmarayappa, Maheswaraiah and
Chandrappa executed a registered Power of Attorney in
favour of A.K.Gururao on 07.02.1972 to look after the
affairs of schedule property.
4. On the basis of the said GPA, A.K.Gururao has
made certain transactions with the third parties. He
expired. In the meanwhile the then City Improvement
Trust Board (CITB for short) now Bengaluru Development
Authority (BDA for short) has acquired the said land for
formation of house sites. The plaintiffs predecessor after
coming to know about the same, attempted to take
suitable action for getting release of the property from the
acquisition. At that point of time, defendant No.1 came
forward and approached the plaintiffs' predecessor and
promised that he will look after the affairs of the aforesaid
land and he would also take steps to get release the
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property from the acquisition. The plaintiffs' predecessor
and plaintiff No.1 having reposed confidence in defendant
No.1 had executed a GPA in his favour for release of the
property and it was agreed that whatever the expenditure
incurring by defendant No.1 will be repaid to defendant
No.1 by the plaintiffs' predecessor with minimum interest.
Thereafter, defendant No.1 obtained the signature of the
plaintiffs' predecessor on various blank stamps papers,
blank printed forms, blank vakalathnamas and other
various papers stating that as they are required for him to
move before the BDA and Government for release of the
suit schedule land.
5. Since the plaintiffs' predecessor and the
plaintiffs are illiterates without knowing the consequences
of signing on the said papers having reposed confidence
on defendant No.1 have signed the papers. But defendant
No.1 has misused the signed papers by taking undue
advantage of innocence and illiteracy of the plaintiffs and
plaintiffs' predecessors in order to get and unlawful gain
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and to knock of the property in question has converted the
said signed papers for his own benefit and created an
agreement of sale and other valuable documents and also
vakalathnama and other documents are utilized for the
purpose engaging the advocate in the proceedings
instituted by him and obtained orders from the courts in
his favour.
6. The plaintiffs were not aware of the proceedings
initiated by defendant No.1. Also, the plaintiffs had no
awareness regarding Civil Misc. Petition No.16/1998 filed
before the High Court and other proceedings even they
have not engaged an advocate at any point of time.
Defendant No.1 by mis-utilizing the signed vakalathnama,
he himself engaged the advocate, who has acted as per
the instructions of defendant No.1 and obtained orders
from various courts, which were not brought to the
knowledge of the plaintiffs. Therefore, it is alleged that
defendant No.1 has played fraud and has obtained illegal
orders.
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7. It is also stated that the plaintiffs were not
aware of B.Ramaswamy Iyangar and they have not
proposed his name as an Arbitrator before the High Court
or in the legal reply notice and conducting the case and
have not appeared before defendant No.2/Arbitrator and
nor led the evidence. Defendant No.1 has falsely stated
that he has approached the plaintiffs in the year 1998 and
informed them that he has already taken steps for
releasing the property and some of the signatures are
required in that regard and insisted them to sign on
papers, but defendant No.1 by playing fraud obtained
signatures of the plaintiffs. The plaintiffs knew the fraud
played by defendant No.1 and they came to know when
Execution Petition No.568/1999 was filed and immediately
they approached their advocate and came to know that
defendant No.1 had played fraud in obtaining an award
from the Arbitrator.
8. It is further pleaded that A.K.Gururao on the
basis of General Power of Attorney (for short 'GPA'),
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entered into an agreement of sale on 07.02.1972 agreeing
to sell 3 acre 10 guntas in Sy.No.69/2 in favour of
Karnataka Urban Housing Co-operative Societies,
Bangalore. After the death of A.K.Gururao, the plaintiffs'
predecessors and plaintiff No.1 have renewed the
agreement of sale executed by him, on 28.01.1976.
Pursuant to the said agreement of sale, the society has
converted the agricultural land to non-agricultural land for
formation of house sites and to allot the same to its
members and filed number of cases for releasing the said
property from BDA. In the year 1998, the Government
released the property from acquisition to an extent of 2
acres 10 guntas. After denotifying the said land, the
Society got issued notices to the plaintiffs for completing
the sale transaction. Defendant No.1 on the basis of the
created documents has renewed the agreement of sale
dated 28.01.1976 on 10.03.1999, thereafter the Society
has filed suit in O.S.No.4354/1999 and the plaintiffs have
entered into compromise with Society and said suit was
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decreed in accordance with the compromise petition. As
such, defendant No.1 has no manner of right, title or
interest over the schedule property and he is not entitled
to get the award on the basis of the documents created by
him. Hence, the impugned award passed by the learned
Arbitrator is not sustainable.
9. Being aggrieved by the award passed by the
learned Arbitrator, the Arbitration suit is preferred under
Section 34 of the Act, 1996 by raising various grounds
that the agreement of sale dated 18.05.1981 and
subsequent agreement of sale dated 10.08.1996 are
created and concocted one. There was no arbitration
agreement. However, subsequently arbitration clause was
inserted without knowledge of the plaintiffs. There were no
signatures of the plaintiffs or their predecessors.
Therefore, there was no arbitration clause to appoint
Arbitrator and the plaintiffs were unaware of appointment
of arbitrators and his proceedings, therefore, award
passed by defendant No.2 is illegal. The Arbitrator has not
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followed the principle of natural justice and award passed
by the Arbitrator is opposed to public policy. The
Arbitration award passed is by playing fraud, but the
award passed dated 08.02.1999 has not been
communicated to the plaintiffs.
10. Further the plaintiffs came to know about
passing of such award on 13.06.1999, when notice in
Execution Petition No.568/1999 was served on plaintiff
Nos.1 and 8; therefore, the plaintiffs were unaware about
the award passed. Hence, there is no question that the
suit filed is barred by limitation.
11. Defendant No.1 appeared through his counsel
and filed written statement. Defendant No.2 is the
Arbitrator and has remained absent. Defendant No.1
denied the material contents and all the averments made
in the plaint. It is pleading of the plaintiffs that they have
entered into agreement of sale of schedule property. The
appointment and conduct of arbitral proceedings are all in
accordance with law and there is no illegality committed,
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nor defendant No.1 has committed any fraud. Defendant
No.2 by conducting arbitral proceedings as per law had
passed enforceable arbitration award with due process of
law and it is binding upon the plaintiffs, therefore,
Execution petition was filed. Thus, the suit filed by the
plaintiffs is barred by limitation.
12. Based on the pleadings, the City Civil Court has
framed the following points for consideration:
1. Whether the plaintiffs prove any of the
grounds mentioned under Section 34 of
the Arbitration and Conciliation Act,
1996, to set aside the award passed by
the learned Arbitrator on 08.02.1999?
2. Whether the plaintiffs prove that the
sale deed dated 25.08.1999 got
executed by defendant No.1 through
the process of court in
E.P.No.568/1999, is null and void?
3. Whether the plaintiffs are entitled for
the reliefs and prayed for?
4. What Order?
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13. The City Civil Court held that the plaintiffs have
not made any sufficient grounds to set aside the award as
per Section 34 of the Act, 1996. Further held that the
plaintiffs have failed to prove that the sale deed dated
25.08.1999 got executed by defendant No.1 is void,
therefore, the process of Court in Arbitration Proceedings
No.568/1999 is null and void. The City Civil Court has
assigned reasons that as per parameters enumerated in
Section 34 of the Act, 1996 the award cannot be set aside
as there is no ground available to set aside the same. Also
the suit filed is barred by limitation. The City Civil Court
held that there was clause for referring the matter to
Arbitrator in case of dispute arises and the agreement is
binding on both the parties. Hence, formed opinion that
award cannot be set aside.
14. The City Civil Court has opined that an order of
High Court appointment of arbitrator in Civil Miscellaneous
case No.16/1998 is binding on by the parties to be arbitral
proceedings. Further, the plaintiffs have not raised
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objection regarding lack of jurisdiction of arbitral Tribunal
as per Section 16(2) of the Act. Further, the Trial Court
held that defendant No.1 had not played fraud and also
the Arbitrator has conducted proceedings by following
principle of natural justice and therefore, no grounds
available for setting aside the arbitral award. Therefore,
dismissed the suit.
15. Being aggrieved by the dismissal of arbitration
suit, the plaintiffs, who are owner of the property and
subsequent vendor of the property, viz., Society has
preferred the appeals by raising various grounds.
16. Learned counsel for appellants/plaintiffs in
consonance with the grounds raised in the memorandum
of appeal have submitted that the City Civil Court has
failed to appreciate that both defendant Nos.1 and 2 have
colluded each other and it is well designed proceedings
just to help defendant No.1. Though fraud is demonstrated
through production of certified copies of the proceedings in
A.C.No.20/1999 filed by defendant No.1 before the
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Arbitrator, which is filed by him on 26.03.1999, an
affidavit was also filed in support of the application
asserting that arbitral award had not been passed as on
that day, but surprisingly a memo was filed by the counsel
for respondent No.1 on 29.07.1999 asserting that the
award had already been passed by the learned Arbitrator
on 08.02.1999 itself i.e., on 1½ month earlier to the filing
of the Arbitration suit. Defendant No.1 had produced the
order sheet of the arbitral proceedings till 25.03.1999
which shows that no award has been passed, but all of a
sudden a predated award is created by the learned
Arbitrator in collusion with defendant No.1. Therefore,
mischief is played just to keep the plaintiffs in dark.
17. Further submitted that the relief sought in the
suit is to set aside the award dated 08.02.1999 on the
ground of fraud played and fraud is well established by
producing certified copy of the proceedings in
A.C.No.20/1999 filed by defendant No.1, but the City Civil
Court has not considered the same. Hence, the award
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passed is by playing fraud and dismissal of suit is illegal
and its findings are perverse in nature.
18. Further, argued that in spite of specific direction
to defendant No.2, he has not produced records of the
arbitral proceedings. The learned Arbitrator/respondent
No.2 has filed a memo to the effect that he has produced
all the documents before this Court in Civil Miscellaneous
Petition No.16/1998 on 08.04.1999. The scope of
proceedings under Section 11(6) of the Act, 1996 is
limited and there is no necessity of calling for records
therefore, defendant No.2-Arbitrator has falsely stated
that the records were sent to this Court in the above said
CMP proceedings.
19. Though sufficient materials were produced
before the City Civil Court that defendant No.2 and
defendant No.1 have played fraud just to achieve unlawful
gain by defendant No.2, but the City Civil Court has not
appreciated the same. Hence, the order passed by the City
Civil Court in dismissing the suit is perverse and illegal.
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The City Civil Court has wrongly formed opinion that there
was clause of arbitration in the agreement, but actually it
is not found in the agreement. Therefore, the City Civil
Court has not considered the case in true and correct
perspective manner. Hence, prays to allow the appeal and
set aside the award passed by defendant No.2-Arbitrator
and the order passed by the City Civil Court.
20. In appeal in MFA No.6720/2016, the
appellant/Karnataka Housing Co-operative Society Ltd.,
has raised grounds that initiation of arbitral proceedings is
without jurisdiction as there is no such clause in the
agreement for referring the dispute to the learned
Arbitrator. Further urged that the General Power of
Attorney and the original agreement were already handed
over to the society and on the joint efforts of owners
appellant/society and subsequently the appellant/society is
directed to pay conversion fine by the CITB which has
been paid by the society, layout was formed and is
approved by the BDA as per resolution No.741 and all
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these things have been happened during the lifetime of
Thimmarayappa and after his death, legal heirs of
Thimmarayappa namely respondent Nos.1 to 9 could not
execute an agreement of sale in favour of respondent
No.10 as they have no right, title, interest and possession
over the same.
21. Neither, the Arbitrator nor the District Court
have examined the documents are created documents just
to deprive the rights of owner and the appellant/society.
There was fraud played by referring the case to the
arbitration as there is no clause of arbitration and
therefore, the entire arbitral proceedings is behind back of
the owner and appellants. The City Civil Court without
calling for records and without seeing the records has
erroneously passed the order confirming the award passed
by the learned Arbitrator.
22. When the City Civil Court had called for records
of arbitration, but respondent No.2/Arbitrator had filed a
memo to the effect that the records were produced in CMP
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No.16/1998. However, the scope of proceedings under
Section 11(6) of the Act, 1996 is limited, restricted and
confined to the extent of appointment of the learned
Arbitrator and the award passed by the learned Arbitrator
will be subject to jurisdiction of the competent authorities.
Therefore, there is no occasion by the High Court to call
for arbitration records. Therefore, in this regard to hide
out the truth involved in the case the learned Arbitrator
had filed false affidavit before the City Civil Court by
saying that the records were forwarded to the High Court
and this is erroneously appreciated by the City Civil Court.
Therefore, fraud vitiates all solemn acts, which is not
considered by the City Civil Court. The Trial Court has
wrongly came to conclusion that there was clause of
arbitration in the agreement, but in fact it was fraud
played referring the case to Arbitrator and the Arbitrator is
tailor made as per whims of respondent No.1 and
therefore, both defendants were in collusion just to knock
of the property, which is revealed in the case, but the Trial
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Court has failed to appreciate all these things. Hence,
resulting into passing of erroneous order.
23. Learned counsel for the appellant/owner as well
as the Karnataka Housing Co-operative Society have
submitted that there was no clause in the agreement for
referring the matter to the Arbitrator, but it was wrongly
referred to the Arbitrator. Furthermore, the Arbitrator has
played fraud and it could be seen apparently on the face of
the record that on the date of award virtually there is no
award, but subsequently the award is created just to suit
the respondent No.1. Further submitted that the learned
Arbitrator cannot pass award pertaining to specific
performance of agreement, which the City Civil Court
alone has jurisdiction. Therefore, award of the learned
Arbitrator itself is compelling the appellant/owner to sell
the land to respondent No.1 at thrown away price.
Therefore, the award passed by the learned Arbitrator is
without jurisdiction and by playing fraud. The City Civil
Court in toto while acting under Section 34 of the Act,
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1996 has failed to appreciate these things though
demonstrated before it. The learned District Judge had not
seen the records, but only on the basis of agreement of
sale has passed awards. Therefore, the order passed by
the City Civil Court as well as the award are liable to be
set aside. Hence, prays to allow the appeal.
24. The respondents' counsel remained absent in
spite of giving sufficient opportunities.
25. Upon hearing both the learned counsel
appearing for the parties and perusal of the records, the
following points that would arise for consideration:
i) Whether, under the facts and circumstances
involved in the case, the appellants make out
sufficient grounds to make interference with
the award passed by the learned Arbitrator as
per Section 34 of the Arbitration and
Conciliation Act, 1996 and the order passed
by the District Court is perverse?
ii) Whether, under the facts and circumstances
involved in the case, the award passed by the
learned Arbitrator and the order passed by
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the City Civil Court requires interference by
this Court?
26. Upon considering the chronological events,
respondent No.1 has created agreement of sale in his
favour on 18.05.1981 in respect of lands of the appellants
measuring 02 acre 20 guntas in Sy.No.69/2A of
Agradasarahalli village, Yahsvanthapura Hobli, Bengaluru
North taluk. The said land was subject matter for
acquisition by the BDA and therefore the appellants were
on the verge of losing the land; hence, they have
requested respondent No.1 to exclude the land from
acquisition proceedings by the BDA. Another agreement
was formed by respondent No.1 on 10.08.1996, but
fraudulently converted the same as an agreement of sale
in respect of the property by making corrections,
interpolations and writing on the agreement, which can be
seen. Since there was dispute arose, respondent No.1 filed
a Civil Miscellaneous Petition in CMP No.16/1998 under
Section 11(6) of the Act and it was allowed appointing
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respondent No.2 as sole Arbitrator for resolving the
dispute of specific performance.
27. It is the contention of the appellants that the
appellants have not at all executed any agreement of sale
in favour of respondent No.1, but respondent No.1 has
fraudulently created a clause for specific performance.
When this being the dispute that arose between the
appellant and respondent No.1, such CMP was filed on
29.05.1998. Respondent No.1 filed A.C.No.20/1999 before
the City Civil Court under Section 9 of the Act against the
appellants seeking relief of injunction from alienating or
encumbering the property.
28. When this being the fact, the
appellants/society was not party in the arbitration
proceedings. The society is the holder of an agreement of
sale from the appellants/plaintiffs, who are the owners but
this society was not made a party in the arbitration
proceedings. Therefore, the award passed by respondent
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No.2/Arbitrator whatever it may be, is beyond the
knowledge of the appellant/Housing Society.
29. On 29.07.1999, respondent No.1 being
petitioner in A.C.No.20/1999 filed a memo stating that on
08.02.1999 award was passed and it has been enforced in
execution case No.5779/1999 before the City Civil Court.
Therefore, submitted that the above said petition does not
survive for consideration and hence requested
A.C.No.20/1999 may be dismissed as not pressed.
30. However, respondent No.1 in A.C.No.20/1999
has filed petition under Section 9 of the Act, 1996 along
with an affidavit on 26.03.1999 stating that respondent
No.2 was appointed as an Arbitrator and heard the entire
dispute and recorded the evidence of the parties and
reserved the matter to pass an arbitration award in
respect of the schedule lands. It is specifically stated that
the decision is yet to be pronounced; this part of
statement can be seen in paragraph No.2 in the affidavit
filed on 26.03.1999.
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31. Further, the learned Arbitrator at paragraph
No.3 has deposed in the sole affidavit that the Arbitrator
has not completed proceedings in the arbitration and that
30 days are required to be given and the respondents
have to take time to file objections to the proceedings or
comply with the arbitration proceedings. Therefore, as per
this statement of respondent No.1 as on 26.03.1999 till
that day respondent No.2 has not pronounced the award
in the arbitration proceedings, but in the memo filed on
29.07.1999, it is stated that on 08.02.1999 the learned
Arbitrator had passed an award; therefore, this is nothing
but proof of collusion between respondent Nos.1 and 2 in
getting an award by whatever means. Also, respondent
No.1 has not furnished a correct execution petition
number, which is numbered as E.P.No.568/1999, but
wrongly stated number as E.P.No.5779/1999 just to
mislead the appellants so as to make that the appellants
not to appear in execution case. Therefore, the appellants
have filed A.C.No.76/1999 before the City Civil Court,
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Bengaluru by making the Arbitrator as party as per Rule 4
(c) of High Court of Karnataka Arbitration (Proceedings
before Courts) Rules, 2001 with allegation that both
respondent Nos.1 and 2 have played fraud in collusion
with each other.
32. Before the City Civil Court in A.C.No.76/1999,
the Court has called for entire records pertaining to the
arbitral proceedings, but respondent No.2 filed a memo
stating that he had produced the arbitration documents in
CMP No.16/1998 on 08.04.1999. However, upon
considering the CMP proceedings in CMP No.16/1998 there
was no occasion for the High Court to call for records and
arbitration proceedings because the scope under Section
11(6) of the Act is very limited for the purpose of
appointing the Arbitrator. The High Court in a Civil
Miscellaneous Petition under Section 11(6) of the Act had
no occasion to call for the records, but only appoint the
Arbitrator. All these eventualities with chronological dates
proved the fact that the conduct of proceedings by
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respondent No.2 is nothing but fraud played. This factual
aspect found on the records was not at all correctly
appreciated by the City Civil Court while exercising power
under Section 34 of the Act, 1996. Though the award
could be challenged under Section 34 of the Act with
limited scope and jurisdiction as per the conditions applied
therein, fraud vitiates all things and the entire proceedings
have become void ab-initio. This fact emerged from the
records was not appreciated by the City Civil Court
correctly resulting into passing of erroneous order
dismissing the arbitration suit.
33. As could be seen from the records, the whole
exercise of arbitral proceedings by appointing respondent
No.2 as Arbitrator is nothing but just to knock off the
property on the guise of specific performance of contract.
It is the case of the appellants that an agreement of sale
was not executed, but respondent No.1 has created that
document and arbitral proceedings were initiated to claim
relief of specific performance. An award is passed for
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specific performance of the contract directing the
appellants to sell the lands by receiving balance sale
consideration amount. Whether this could be done by the
Arbitrator is the question to be considered. The grant of
relief of specific performance is complete domain of City
Civil Court under Section 20 of the Specific Relief Act, but
respondent No.2 being an Arbitrator has passed an award
of specific performance of contract. Therefore, considering
the entire chronological events as discussed above, the
arbitral proceedings are nothing but collusive in nature
between respondent Nos.1 and 2 and by playing fraud for
illegal gain. These factors were lost sight by the City Civil
Court resulting into passing of erroneous order in
dismissing the suit. Accordingly, I answer point Nos.(i) and
(ii) in the affirmative. Hence, the appeals are liable to be
allowed.
34. In the result, I proceed to pass the following:
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ORDER
i. Appeals in MFA Nos.2962 and 6720 of
2016 are allowed.
ii. The order dated 20.02.2016 passed in
A.C.No.76/1999 on the file of LII
Additional City Civil and Sessions Judge,
Bengaluru City (CCH-53), and also award
dated 08.02.1999 passed by respondent
No.2/Arbitrator are set aside.
iii. Registry is directed to send back the Trial
Court Records along with a copy of this
judgment.
iv. No order as to costs.
In view of disposal of the appeals, pending
applications, if any, shall stand disposed of.
SD/-
(HANCHATE SANJEEVKUMAR)
JUDGE
SRA
CT:BCK
