Madras High Court
M/S.Radiance Realty Developers ... vs S.Gangadharan on 20 April, 2022
Arb.O.P (Com.Div.) No.11 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 20.04.2022
CORAM
THE HON'BLE MR. JUSTICE M.SUNDAR
Arb.O.P (Com.Div.) No.11 of 2022
&
O.A.No.694 of 2021
M/s.Radiance Realty Developers India Ltd.,
1st Floor, Old No.110, New No.111
33 Feet Road, Anna Salai, Guindy
Chennai - 600 032
Rep. by its Authorised Signatory
Mr.K.Kannadasan ... Petitioner
in Arb O.P and O.A
Vs.
1. S.Gangadharan
2. G.Vijaya ... Respondents
in Arb O.P and O.A
Prayer in Arb.O.P (Com.Div.) No.11 of 2022: Arbitration Original
Petition filed under Section 11 (6) of the Arbitration and Conciliation Act,
1996 to appoint a sole Arbitrator to adjudicate over the dispute arising out
of the MOU dated 28.03.2018 between the petitioner and respondents.
Prayer in O.A.No.694 of 2021 : Judge's summons filed under Order XIV
Rule 8 of Madras High Court Original Side Rules red with Section 9 of
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Arb.O.P (Com.Div.) No.11 of 2022
Arbitration and Conciliation Act, 1996 to grant the respondents, their son,
agents or any one on their behalf be temporarily injuncted from in any
manner interfering with the General Power of Attorney dated 18.04.2018 for
the schedule property in any manner until the dispute between the parties
are resolved.
For Petitioner : Mr.Rahul M.Shankar
in Arb.O.P and OA
For Respondents : Mr.V.R.Appaswamee
in Arb.O.P and OA
COMMON ORDER
This common order will now dispose of the captioned two matters.
2. Captioned Arb.O.P (Com.Div.) No.11 of 2022 has been presented
in this Court on 05.01.2022 under Section 11 of 'The Arbitration and
Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter 'A and C Act' for
the sake of convenience and clarity] with a prayer for appointment of a sole
Arbitrator.
3. Captioned O.A.No.694 of 2021 has been presented in this Court
under Section 9 of A and C Act with a prayer for interim injunction against
interference qua a General Power of Attorney dated 18.04.2018.
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Arb.O.P (Com.Div.) No.11 of 2022
4. From hereon and henceforth, in this order, for the sake of
convenience, 'Arb.O.P (Com.Div.) No.11 of 2022' shall be referred to as
'Section 11 OP' and 'O.A.No.694 of 2021' shall be referred to as 'Section 9
application', both for the sake of convenience and clarity.
5. Orders made by Hon'ble predecessor Judge in Section 9 application
on 02.11.2021 reads as follows:
' This Original Application has been filed seeking to grant an
order of interim injunction restraining the respondents from
interfering with the General Power of Attorney dated 18.04.2018 for
the schedule property in any manner until the dispute between the
parties are resolved.
2. It is the contention of learned counsel appearing for
applicant that they have entered into Memorandum of
Understanding dated 28.03.2018 for developing the subject property
and the applicant has to construct the house in entire land belongs to
the respondent. In fact, the respondents have received a sum of
Rs.8,92,25,000/- towards sale consideration without claiming any
share in the property. Pursuant to the above memorandum of
understanding, they have also executed a outright sale agreement
and received entire sale consideration. After receiving entire sale
consideration, the entire properties have been developed and
construction have been put up. Now, the respondents have suddenly
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Arb.O.P (Com.Div.) No.11 of 2022
issued a legal notice dated 22.10.2021 seeking the statement of
accounts and also interfering with the General Power of Attorney.
The same would indicates that the respondents may take steps even
to cancel the General Power of Attorney. Hence, the applicant
prayed for injunction.
3. Having regard to the fact that the Memorandum of
Understanding entered between the parties would indicate that the
respondents herein agreed to convey an extent of 4 acres 22 cents as
outright sale for the Developer and the Developer has to develop the
property, sell the property and all the sale proceeds have to be
received only by the Developer. Further, the agreement dated
19.04.2018 entered between the parties, in which clause 2 would
indicates that the consideration as agreed in the memorandum of
understanding was already received by the respondents. In pursuant
to the same, the General Power of Attorney has been executed
between the parties on 18.04.2018.
4. Having regard to the above fact that though the document
is filed as memorandum of understanding entered between the
parties, in fact, the above document may be read along with the
agreement of sale, the same would indicates that the respondent
having agreed to sell the property for a total consideration of
Rs.8,92,25,000/-, which is said to have been received by the
contractor. Such being the position, after the property has been
developed and construction have been put up and it is ready for sale,
now the rights of applicant if interfered by the respondents merely on
the ground that the property has not been transferred legally, the
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Arb.O.P (Com.Div.) No.11 of 2022
same would cause irreparable injury. Considering the fact that the
applicant has made out a prima facie case and balance of
convenience is in favour of the applicant, there shall be an order of
interim injunction restraining the respondents in any manner
interfering with the General Power of Attorney dated 18.04.2018
and the applicant shall comply the order XXXIX Rule 3 of C.P.C. by
then.
5.Notice to the respondents returnable by 22.11.2021.
Private notice is also permitted.
6. Post the matter on 22.11.2021.'
6. In the hearing today, Mr.Rahul M Shankar, learned counsel for
petitioner in Section 11 OP / sole applicant in Section 9 application and
Mr.V.R.Appaswamee, learned counsel for both the respondents in Section
11 OP and in Section 9 application are before this Court. Both the learned
counsel submit that the aforementioned interim order granted by the Hon'ble
predecessor Judge on 02.11.2021 has been extended from time to time and
is now operating.
7. Be that as it may, both learned counsel also submit that the parties
are exploring the possibility of a settlement, more importantly there is no
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Arb.O.P (Com.Div.) No.11 of 2022
disputation or contestation about the existence of arbitration agreement
between the parties. To be noted, arbitration agreement between the parties
is in the form of a clause (clause 15) in a 'Memorandum of Understanding'
['MOU'] dated 28.03.2018 and this clause 15 in the MOU reads as follows:
'15. Any dispute, controversy or claims arising out of or
relating to this MoU shall be settled by arbitration in accordance
with the provisions of the Indian Arbitration and Conciliation Act,
1996. The arbitral tribunal shall be composed of a sole arbitrator
mutually appointed by the parties. The place of arbitration shall be
at Chennai and any award whether interim or final, shall be made,
and shall be deemed for all purposes between the parties to be made,
in Chennai. The arbitral procedure shall be conducted in English
Language and any award or awards shall be rendered in English.
The procedural law of the arbitration shall be Indian law. The
award of the arbitral Tribunal shall be final and conclusive and
binding upon the parties.'
8. As there is no disputation or contestation regarding the existence of
arbitration agreement, this Court deems it appropriate to dispose of Section
11 OP (this Court takes note of sub-section (13) of Section 11 of A and C
Act) by appointing a sole Arbitrator.
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Arb.O.P (Com.Div.) No.11 of 2022
9. To be noted, perimeter of a legal drill under Section 11 of A and C
Act is ingrained / drawn in by sub-section (6A) thereat i.e., it is largely
confined to examination of existence of arbitration agreement. This
principle has been laid down by Hon'ble Supreme Court in Mayavati
Trading case law [Mayavati Trading Private Limited Vs. Pradyuat Deb
Burman reported in (2019) 8 SCC 714], relevant paragraph in Mayavati
Trading case law is paragraph 10 and the same reads as follows:
'10. This being the position, it is clear that the law prior to
the 2015 Amendment that has been laid down by this Court, which
would have included going into whether accord and satisfaction
has taken place, has now been legislatively overruled. This being
the position, it is difficult to agree with the reasoning contained in
the aforesaid judgments, as Section 11(6-A) is confined to the
examination of the existence of an arbitration agreement and is to
be understood in the narrow sense as has been laid down in the
judgment in Duro Felguera SA.'
(underlining made by this Court to
supply emphasis and highlight)
10. Aforementioned paragraph 10 of Mayavati Trading case law
takes this Court to Duro Felguera principle [Duro Felguera, S.A. versus
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Arb.O.P (Com.Div.) No.11 of 2022
Gangavaram Port Limited reported in (2017) 9 SCC 729]. To be noted,
most relevant Paragraphs in Duro Felguera case law are paragraphs 47, 59
and the same read as follows:
'47. What is the effects of the change introduced by the
Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter
referred to as 'the 2015 Amendment' ) with particular reference to
Section 11(6) and the newly added Section 11(6-A) of the
Arbitration and Conciliation Act, 1996, (hereinafter referred to as
“the 1996 Act”) is the crucial question arising for consideration in
this case.'
'59. The scope of the power under Section 11 (6) of the 1996
Act was considerably wide in view of the decisions in SBP and Co.
(supra) and Boghara Polyfab (supra). This position continued till the
amendment brought about in 2015. After the amendment, all that the
Courts need to see is whether an arbitration agreement exists -
nothing more, nothing less. The legislative policy and purpose is
essentially to minimize the Court’s intervention at the stage of
appointing the arbitrator and this intention as incorporated in
Section 11 (6A) ought to be respected. '
11. To be noted, the parties exploring the possibility of a settlement
will not be impeded by this order in any manner as even post constitution of
AT i.e., appointment of Arbitrator, settlement can be encouraged under
Section 30 of the A and C Act. Let the parties pursue the settlement talks
and try to give a closure to the matter.
12. One other aspect of the matter which this Court takes note of is,
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constitution of AT will not come in the way of the interim order (granted by
Hon'ble predecessor Judge and now operating) being extended as sub-
section (3) of Section 9 is a bar for entertaining an application but not for
continuing an order in the light of Arcelor Mittal Nippon Steel India Ltd.
Vs. Essar Bulk Terminal Ltd. reported in 2021 SCC OnLine SC 718.
Relevant paragraph in Arcelor Mittal Nippon Steel India Ltd. case is
Paragraph 62 and the same reads as follows:
'62. Sub-section (3) of Section 9 has two limbs. The first limb
prohibits an application under sub-section (1) from being
entertained once an Arbtiral Tribunal has been constituted. The
second limb carves out an exception to that prohibition. If the Court
finds that circumstance exist, which may not render the remedy
provided under Section 17 efficacious.'
13. In the light of the narrative thus far, the following order is passed:
(i) Hon'ble Mr.Justice N.Authinathan (Retd.,), a former
Judge of this Court residing at No.37, A-Block, Lakshmi Nivas,
Marshalls Road, Egmore, Chennai- 8, (Ph: 2999 6122, Mob:
9445508822) is appointed as sole Arbitrator.
(ii) Hon'ble sole Arbitrator is requested to enter upon
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Arb.O.P (Com.Div.) No.11 of 2022
reference qua arbitrable disputes that have arisen between the
petitioner and respondent qua MOU dated 28.03.2018,
adjudicate upon the same and make an award by holding
sittings in the 'Madras High Court Arbitration and Conciliation
Centre under the aegis of this Court' (MHCAC) and conduct
arbitration in accordance with the Madras High Court
Arbitration Proceedings Rules 2017. Fee of the Hon'ble
Arbitrator shall be in accordance with the Madras High Court
Arbitration Centre (MHCAC) (Administrative Cost and
Arbitrator's Fees) Rules 2017;
(iii) The parties are free to proceed with settlement talks
and they can always take recourse to Section 30 of A and C Act
before Hon'ble Arbitrator;
(iv) Interim order already granted by Hon'ble predecessor
Judge on 02.11.2021 in Section 9 application (O.A.No.694 of
2021) which has been extracted and reproduced elsewhere
supra in this order shall continue to operate for a period of eight
weeks from today i.e., upto 15.06.2022 or till the first sitting of
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Arb.O.P (Com.Div.) No.11 of 2022
the Hon'ble Arbitrator whichever is later;
(v) It is open to the parties to approach the Hon'ble
Arbitrator under Section 17 of A and C Act for the same or any
other interim orders if the need arises and if such a course is
adopted, Hon'ble Arbitrator shall deal with the same on its own
merits and in accordance with law notwithstanding this judicial
order.
14. Captioned Arb.OP and captioned application are disposed of in
the aforesaid manner by this common order. There shall be no order as to
costs.
20.04.2022
Speaking/Non-speaking order
Index : Yes / No
gpa/nsa
Note: The Registry is directed to communicate this order forthwith to
1. Mr.Justice N.Authinathan (Retd.,),
No.37, A-Block, Lakshmi Nivas,
Marshalls Road,
Egmore, Chennai- 8,
Ph: 2999 6122, Mob: 9445508822
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Arb.O.P (Com.Div.) No.11 of 2022
M.SUNDAR.J.,
gpa/nsa
2. The Director
Tamil Nadu Mediation Conciliation Centre
-cum- Ex-Officio Member
Madras High Court Arbitration Centre
Chennai - 104.
Arb.O.P (Com.Div.) No.11 of 2022
20.04.2022
https://www.mhc.tn.gov.in/judis
