Ravinder Kumar Agarwal vs Tasleem Abdullah Chougle
2024 Latest Caselaw 756 Tel

Telangana High Court

Ravinder Kumar Agarwal vs Tasleem Abdullah Chougle on 23 February, 2024

     THE HONOURABLE SRI JUSTICE K.SARATH

        Arbitration Application No.166 of 2022

ORDER:

Heard Ms. D. Shalini Shravanthi representing

Sri D. Srinivas Prasad, Learned Counsel for the

applicants and Sri Abhinav Krishna Uppaluri,

representing Sri S. Jasbeer Singh, Learned Counsel

for the respondents.

2. This application is filed to appoint a sole

arbitrator to decide the claims and disputes between

the applicants and the respondents in terms of the

arbitration clause in the agreement

dated 27.01.2013 and to grant costs of the

application to be paid by the respondents to the

applicants.

3. Learned Counsel for the applicants submits

that the respondents through their GPA holder have

agreed to sell the flat admeasuring 3500 sq. feet in

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the first floor in Block A in Tower No.A11 in the

apartment known as 'The Valencia' with

proportionate undivided share in the land out of the

total land admeasuring 8,830.73 sq. yards with

three car parking areas in the 5 cellars and a

servant quarter forming part of the premises, by way

of agreement of sale dated 27.01.2013 for a total sale

consideration of Rs.73,50,000/-. The said complex

has to be constructed within a period of 24 months

with a grace period of 6 months from the date of

agreement. If there is delay beyond 30 months

inclusive the grace period of 6 months, the

respondents agreed to pay a sum of Rs.20/- per sq.

feet for the total extent of flat till the date of delivery

of possession of the said property completing with all

aspects.

4. Learned Counsel for the applicants further

submits that initially, when the agreement was

entered into, the respondents have agreed to sell the

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flat admeasuring 3080 sq. feet in the first floor of

Block A in Tower No.9, later the respondents after

obtaining the revised permissions from the

appropriate authorities have requested the

applicants to take the flat in Tower No.A11 in the

first floor instead of Tower No.9 in the first floor and

the area of flat is increased to 3500 sq. feet from

3080 sq. feet and the sale consideration was also

increased by Rs.8,86,200/- and all the changes were

incorporated under a supplementary agreement

dated 29.09.2015. In the meantime, the applicants

have paid installments regularly in phase manner as

per the agreement and finally they have paid a sum

of Rs.5,00,000/- through cheque bearing No.081797

drawn on ICICI Bank dated 03.04.2019 and paid

total amount of Rs.48,08,300/- to the respondents

and the same was admitted by the respondents in

their counter affidavit. The balance consideration

has to be paid at the time of registration of the sale

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deed subject to actual measurements as specified in

the supplementary agreement. The respondents have

to complete the construction of the entire complex in

all aspects within 30 months including the grace

period of 6 months. However, as there is huge delay

in completion of the flat and handing over the same

in all aspects as agreed, the respondents are liable to

pay a sum of Rs.56,70,000/- to the applicants.

5. Learned Counsel for the applicants further

submits that the respondents have failed to

complete the construction of the entire complex

including the said property as per the terms agreed.

It has come to the notice of the applicants that

the GPA holder of respondents had sold some of the

flats which have fallen to the share of the

respondents and disputes arose in respect of the

same. The applicants also came to know that the

GPA holder was trying to alienate the said property

which was agreed to sell to the applicants. Though

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the GPA holder has executed a sale deed in favour of

the applicants and gave assurance to perform the

part of contract and to complete the said property in

all aspects on or before 31.05.2020, he failed to

perform the same.

6. Learned Counsel for the applicants submits

that though the applicants have paid the total

amount of Rs.48,08,300/-, there was no delivery of

possession of the flat under the agreement of sale

even after the period expired. He submits that

though the applicants are ready and willing to

perform their part of the contract, the respondents

gave evasive answers and failed to deliver on its

promises and they are trying to alienate the said

property agreed to be sold to the applicants in spite

of receiving substantial amount from the applicants.

Hence, the applicants had invoked the arbitration

clause seeking appointment of a sole arbitrator to

adjudicate the disputes between the parties as per

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the arbitration clause in the agreement of sale dated

27.01.2013 and sent a notice dated 18.06.2022 to

the GPA holder of the respondents and the same was

returned unclaimed and in view of the same, the

applicants have filed instant application and

requested to allow the same.

7. Learned counsel for the applicants has relied

on the following judgment:

1. Bharat Sanchar Nigam Limited and another vs.

Nortel Networks India Private Limited 1.

8. Learned Counsel for the respondents based on

the counter averments submits that as per the

agreement of sale dated 27.01.2013, the sale

consideration has to be paid in phase manner,

however the applicants have grossly failed to do so.

Originally, the GPA holder has obtained building

permit order from the GHMC for construction of the

(2021) 5 SCC 738

SK, J Arb.Appl.166 of 2022

cellar+Ground+Five Upper Floors vide permit

dated 20.10.2009 and thereafter, the respondent

No.1 obtained revised building permit order from the

GHMC, which was sanctioned with Permit dated

14.02.2017 and the name of the residential

apartment was renamed as "The Valencia" in place

of 'FIMA hill top'. The applicants have failed to pay

the complete sale consideration of Rs.1,78,94,250/-

and paid meager amount of Rs.31,84,800/- which is

not even close to 50% or half of the sale

consideration. Though the agreement of sale was

executed in the year 2013, the applications have

approached this Court in the year 2022 i.e, after a

period of 9 years. The documents relied on by the

applicants i.e., Memorandum of Understanding

dated 27.01.2013, agreement of sale dated

27.01.2013 and the supplementary agreement dated

29.09.2015 are insufficiently stamped in accordance

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with Section 16 of the Arbitration and Conciliation

Act, 1996 (for short 'the Act') and as such the same

shall not be admitted as evidence without

impounding the same under the Stamp Act and the

application is liable to be rejected.

9. Learned Counsel for the respondents further

submits that the arbitrator cannot be appointed

basing on insufficiently stamped instrument and

even if the said instrument is impounded, the same

has to be dismissed on the ground of limitation as

the time limit for finishing the construction of flats

as per the agreement of sale dated 27.01.2013 is 24

months or 2 years with a grace period of 6 months.

In terms of the revised building permit order, the

respondents have already commenced the

construction and sold several individual flats to

various individuals and the said apartment has been

approved by the Bankers for grant of home loans to

the flat purchasers. The residential apartment of the

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respondent has all legal requirements and no

portion of the said apartment suffers with any legal

lacuna. The agreement of sale was executed in the

year 2013, but the applicants have approached this

Court in the year 2022 and hence, the application is

liable to be dismissed.

10. Learned Counsel for the respondents further

submits that the claim and the time within which

the arbitrator shall be appointed is barred by

limitation as the limitation period for proceeding to

appoint arbitrator ends on 26.07.2018 and the

notice for initiating arbitration was issued on

18.06.2022 i.e., after four years of limitation being

ended for seeking appointment of arbitrator. Learned

Counsel further submits that the notice under

Section 11 of the Act was not served upon the GPA

holder of respondents and requested to dismiss the

arbitration application.

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11. Learned Counsel for the respondents has relied

on the following judgment:

1. M/s.B and T AG vs. Ministry of Defence 2

12. After hearing both sides and perusal of the

record, this Court is of the considered view that the

applicants herein had agreed to purchase the flat

admeasuring 3500 sq. feet in the first floor of Block-

A in Tower No.A11 in the apartment known as "The

Valencia" with proportionate undivided share in the

common areas and amenities along with 3 car

parking, each slot in the cellars +G+5 floors together

with proportionate undivided share in the land

respectively, out of the total land admeasuring

8830.73 sq. yards equivalent to 7383.55 sq.metres,

situated at Shaikpet Village and Mandal at Syed

Nagar, First Lancer, Road No.12, Banjara Hills,

Hyderabad.

2023 SCC OnLine SC 657

SK, J Arb.Appl.166 of 2022

13. The respondents through their GPA holder

M/s.Fima Properties Private Limited had initially

entered into agreement of sale with the applicants on

27.01.2013 for the Flat in A block, Tower No.9 in the

1st Floor bearing No.1 admeasuring 3078 square feet

in the apartment known as "Fima Hill Top".

Subsequently, both parties had entered into a

supplementary agreement on 29.09.2015 changing

the schedule property as Flat admeasuring 3500

square feet in Block-A, 1st Floor in Tower No.A11,

the apartment known as "Grand Luxus".

Subsequently, the name of the said apartment was

changed as "The Valencia". As per the agreement,

the respondents have to complete the work and

handover the possession to the applicants within 24

months or 2 years with effect from the date of

agreement with a grace period of 6 months from the

date of expiry of 24 months and if the respondents

failed to complete the entire project within time, the

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applicants shall be entitled to be paid rent over the

schedule property by the respondents on monthly

basis @ of INR Rs.20/- per square feet of total

square feet formed under the schedule property. If

the rental payments exceed 12 months, the

applicants along with like minded applicants reserve

the right for alternative means of having the project

completed.

14. In the supplementary agreement

dated 29.09.2015, it clearly mentioned that the

conditions mentioned in the agreement of sale dated

27.01.2013 shall remain in force and shall be

binding on both the parties. As per the agreement,

the respondents have not completed the

construction within time and the applicants also

without asking any rent from the respondents paid

the amounts as per the progress in the work till

03.04.2019. In the agreement dated 27.01.2013, it

clearly mentioned that any dispute arising out of or

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in connection with this indenture, including any

question regarding its existence, validity or

termination shall be referred to and finally resolved

by arbitration. The number of arbitrators shall be

one. The seat or legal place of arbitration shall be

Hyderabad. The indenture shall be subjected to the

law of the land, for time being in force and to the

Indian Contract Act, 1872. Accordingly, the

Transfer of Property and the Specific Relief Act shall

also be applicable. In view of the same, it clearly

shows that for resolving any dispute between the

parties, arbitration clause exists.

15. The applicants have issued a legal notice to the

respondents on 18.06.2022 invoking arbitration

clause to refer the disputes between them to the

Arbitrator. However, the GPA holder of the

respondents has unclaimed the said notice. In view

of the same, the applicants are constrained to file

instant arbitration application under Section 11(5)

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and (6) of the Arbitration and Conciliation Act, 1996

(for short 'the Act').

16. The contention of the respondents is that this

Court cannot appoint Arbitrator based on the

arbitration agreement which is unstamped as per

the judgment of the Hon'ble Supreme Court in

M/s.N.N.Global Mercantile Private Limited vs.

M/s.Indo Unique Flame Ltd and others 3. But the

same was overruled by the Constitutional Bench

consisting of 7 Judges of the Hon'ble Supreme Court

in Re-Interplay between Arbitration Agreements

under the Arbitration and Conciliation Act, 1996

and the Indian Stamp Act, 1899 4, wherein it was

held as under:

234 (c) An objection as to stamping does not fall for determination under Sections 8 or 11 of the Arbitration Act. The concerned Court must examine whether the arbitration agreement prima facie exists.

2023 (7) SCC 1

2023 SCC Online SC 1666

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17. The main contention of the learned counsel for

the respondents is that the claim and the time

within which the arbitrator shall be appointed is

barred by limitation as per the agreement dated

27.01.2013. The 30 months period of construction

was ended on 26.07.2015 and the cause of action for

not finishing construction within time prescribed in

the agreement of sale ended up on 26.07.2015, the

limitation period for appointment of arbitrator ends

on 26.07.2018. The notice for initiating arbitration

was issued by the applicants on 18.06.2022 and the

same is barred by limitation and the application

cannot be maintainable.

18. The respondents have relied on the Judgment relied

of the Hon'ble Supreme Court in B and TG's case (cited 2

supra), wherein it was held as under:

"54. This Court observed that the Act 1996 has been framed for expeditious resolution of disputes and various provisions have been incorporated in the Act 1996 to ensure that the arbitral proceedings are conducted in a time bound manner. The Act 1996 does

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not prescribe any time period for filing an application under Section 11(6). Since there is no provision in the Act 1996 specifying the period of limitation for filing an application under Section 11, one would have to take recourse to the Act 1963, as per Section 43 of the Act 1996 which provides that the Limitation Act shall apply to arbitrators, as it applies to proceedings in Court.

55. Since none of the articles in Schedule to the Limitation Act provide a time period for filing an application for appointment of arbitrator under Section 11, it would be covered by the residual provision under Article 137 of the Limitation Act which provides that the period of limitation is three years for any other application for which no period of limitation is provided elsewhere in the division. The time limit starts from the period when the right to apply accrues.

56. This Court relied on its various other decisions including few High Court decisions. This Court held that an application under Section 11 is to be filed in a Court of Law, and since no specific Article of the Act 1963 applies, the residual Article would become applicable. The effect being that the period of limitation to file an application under Section 11 is three years from the date of refusal to appoint the arbitrator or on expiry of 30 days whichever is earlier.

68. Cause of action becomes important for the purposes of calculating the limitation period for bringing an action. It is imperative that a party realises when a cause of action arises. If a party simply delays sending a notice seeking reference under the Act 1996 because they are unclear of when the cause of action arose, the claim can become time-barred even before the party realises the same."

The above finding clearly shows that the application for

appointment of arbitrator under Section 11 would be

covered by the residual provision under Article 137 of

the Limitation Act which provides that the period of

limitation is three years for any other application for

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which no period of limitation is provided elsewhere in the

division. The time limit starts from the period when the

right to apply accrues.

19. In the instant case, the last payment was made

on 03.04.2019 and the applicants have issued notice on

18.06.2022 calling upon them to appoint arbitrator and the

applicants, after the mandatory period of 30 days, filed the

present application on 01.08.2022. In view of the same, the

Judgment relied on by the learned counsel for the

respondents is not apply to the instant case.

20. In fact, both the parties in view of the

agreement dated 26.01.2013 and the supplementary

agreement dated 29.09.2015 agreed to pay the

amounts and the respondents have received the

amounts till 03.04.2019 and the same was not

denied by the respondents. It clearly shows the

agreement of sale is in subsistence and continuation

till 03.04.2019 as the respondents have taken

payments from the applicants. The applicants

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admittedly issued notice to the respondents on

18.06.2022 for initiation of arbitration proceedings.

Limitation starts from the last payment i.e.,

03.04.2019. For counting of limitation period for

proceeding to appoint arbitrator ends three years

from 03.04.2019. But due to Covid 19 pandamic, the

Hon'ble Supreme Court in Cognizance For

Extension of Limitation, in Re 5 has suspended the

limitation period in all proceedings including

Arbitration Proceedings from 15.03.2020 to

28.02.2022. In view of the same, the applicants have

initiated arbitration proceedings within three years.

21. Further, in the Judgment relied on by the

Learned Counsel for the applicants in Bharat

Sanchar Nigam Limited's case (cited 1 supra), the

Hon'ble Supreme Court held as under:

"14. Since none of the Articles in the Schedule to the Limitation Act, 1963 provide a time period for filing an application for appointment of an arbitrator

(2022) 3 SCC 117

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under Section 11, it would be covered by the residual provision Article 137 of the Limitation Act, 1963.

Article 137 of the Limitation Act, 1963 provides :

            THIRD               DIVISION-
           APPLICATIONS
           Description of application      Period of Time       from
                                           limitation which period
                                                      begins to run
      137. Any other application for which Three      When        the
           no period of limitation is years           right to apply
           provided elsewhere in this                 accrues.
           Division.

38. Limitation is normally a mixed question of fact and law, and would lie within the domain of the arbitral tribunal. There is, however, a distinction between jurisdictional and admissibility issues. An issue of 'jurisdiction' pertains to the power and authority of the arbitrators to hear and decide a case. Jurisdictional issues include objections to the competence of the arbitrator or tribunal to hear a dispute, such as lack of consent, or a dispute falling outside the scope of the arbitration agreement. Issues with respect to the existence, scope and validity of the arbitration agreement are invariably regarded as jurisdictional issues, since these issues pertain to the jurisdiction of the tribunal.

The above judgment squarely applies to the instant case

and the application is within time.

22. Moreover, Section 43 of the Arbitration and

Conciliation Act, 1996 deals with the limitation.

Section 43(1)(2) of the Act reads as under:

43. Limitation. - (1) The Limitation Act, 1963 (36 of 1963), shall apply to arbitrations as it applies to proceedings in Court.

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(2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963) an arbitration shall be deemed to have commenced on the date referred in section 21.

Section 21 of the Act reads as under:

Commencement of arbitral proceedings. Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

In the instant case, the commencement of arbitral

proceedings start from 18.06.2022 and the same

was unclaimed by the GPA holder of the respondents

who has filed counter on their behalf. The service of

notice by the applicants was deemed service as the

GPA holder, who has received the amounts from the

applicants, was unclaimed the notice. In view of the

same, the Arbitration Application as per Section 11

of the Act is liable to be allowed as all the

requirements were fulfilled by the applicants before

filing of the Arbitration Application.

23. In view of the above findings, the Arbitration

Application is allowed by appointing Sri Justice

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Challa Kodanda Ram, Former Judge, High Court for

the State of Telangana, Hyderabad, as sole arbitrator

to adjudicate the dispute between the applicants and

the respondents in terms of the arbitration clause in

the agreement of sale dated 27.01.2013 and dispose

of the same within a reasonable period of time.

24. The learned Arbitrator is entitled to fees as per the

rates specified in the Schedule - IV to Arbitration Act,

inserted by Act 3 of 2016, which shall be borne by both

parties in equal shares.

25. Miscellaneous applications, if any pending in the

Arbitration Application, shall stand closed. There shall

be no order as to costs.

                                                   _____________________
                                                   JUSTICE K.SARATH
Date:       02.2024.
sj

Note:The Registry is directed to communicate a copy of this order to Sri Justice Challa Kodanda Ram, Former Judge, High Court for the State of Telangana, Hyderabad, Plot No.68, Road No.71, Phase III, Jubilee Hills, Hyderabad 500034.