Telangana High Court
Poolla Ananta Arun vs Tasleem Abdullah Chougle And 10 Others on 23 February, 2024
IN THE HIGH COURT FOR THE STATE OF
TELANGANA AT HYDERABAD
*****
ARBITRATION APPLICATION NO.177 of 2022
Between:
Poolla Ananta Arun rep.by his GPA Holder Sri P. Shiva
Kumar.
...Applicant.
AND
1. Tasleem Abdullah Chougle and others
...Respondents
JUDGMENT PRONOUNCED ON: 23.02.2024
SUBMITTED FOR APPROVAL:
THE HON'BLE SRI JUSTICE K.SARATH
1. Whether Reporters of Local : Yes/No
newspapers may be allowed to
see
the Judgment ?
2. Whether the copies of : Yes/No
judgment may be marked to
Law Reports/Journals
3. Whether Their : Yes/No
Lordship/Ladyship wish to
see the fair copy of judgment
_____________________
JUSTICE K.SARATH
2
SK, J
Arb.Appl.177 of 2022
THE HON'BLE SRI JUSTICE K.SARATH
+ARBITRATION APPLICATION NO.177 of 2022
%Dated 23.02.2024
# Poolla Ananta Arun rep.by his GPA Holder Sri P.
Shiva Kumar.
...Applicant.
AND
$ 1. Tasleem Abdullah Chougle and others
...Respondents
! Counsel for Applicant : Ms. D. Shalini Shravanthi
representing Sri D. Srinivas Prasad.
^ Counsel for Respondents : Sri Abhinav Krishna
Uppaluri, representing Sri S. Jasbeer Singh.
< GIST :
> HEAD NOTE :
? Cases referred :
1 (2021) 5 SCC 738
2 2023 SCC OnLine SC 657
3 2023 (7) SCC 1
4 2023 SCC Online SC 1666
5 (2022) 3 SCC 117
3
SK, J
Arb.Appl.177 of 2022
THE HONOURABLE SRI JUSTICE K.SARATH
Arbitration Application No.177 of 2022
ORDER:
Heard Ms. D. Shalini Shravanthi representing
Sri D. Srinivas Prasad, Learned Counsel for the
applicant 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 applicant 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
applicant.
3. Learned Counsel for the applicant submits that
the respondents through their GPA holder has
agreed to sell the flat admeasuring 3500 sq. feet in
the ground floor in Block A in Tower No.A11 in the
apartment known as 'Grand Luxus" with
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Arb.Appl.177 of 2022
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 applicant further
submits that initially, when the agreement was
entered into, the respondents have agreed to sell the
flat admeasuring 3078 sq. feet in the ground floor
bearing No.G of Block A in Tower No.9, later the
respondents after obtaining the revised permissions
SK, J
Arb.Appl.177 of 2022
from the appropriate authorities have requested the
applicant to take the flat in Tower No.A11 in the
ground floor instead of Tower No.9 in the ground
floor and the area of flat is increased to 3500 sq. feet
from 3078 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 applicant
has paid installments regularly in phase manner as
per the agreement and finally he has paid a sum of
Rs.21,00,000/- on 26.09.2019 and paid total
amount of Rs.31,84,800/- to the respondents and
the same was not specifically denied by the
respondents in their counter affidavit. The balance
consideration has to be paid at the time of
registration of the sale 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
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Arb.Appl.177 of 2022
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 applicant.
5. Learned Counsel 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
applicant 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 applicant also came to know that the
GPA holder was trying to alienate the said property
which was agreed to sell to the applicant. Though
the GPA holder has executed a sale deed in favour of
the applicant 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 applicant submits that
though the applicant has paid the total amount of
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Arb.Appl.177 of 2022
Rs.31,84,800/-, there was no delivery of possession
of the flat under the agreement of sale even after the
period expired. He submits that though the
applicant is ready and willing to perform his 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 applicant in spite of receiving substantial
amount from the applicant. Hence, the applicant
had invoked the arbitration clause seeking
appointment of a sole arbitrator to adjudicate the
disputes between the parties as per the arbitration
clause in the agreement of sale dated 27.01.2013
and sent a notice dated 18.06.2022 to the
Respondents and GPA holder of the respondents and
the same was replied by the respondent Nos.1 to 7
denying appointment of Arbitrator through their
counsel dated 04.07.2022 and the said notice was
returned unclaimed by the GPA holder and in view of
the same, the applicant has filed instant application
and requested to allow the same.
SK, J
Arb.Appl.177 of 2022
7. Learned counsel for the applicant 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 applicant has grossly failed to do so.
Originally, the GPA holder has obtained building
permit order from the GHMC for construction of the
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 "Grand Luxus" in place
of 'FIMA hill top'. The applicant has failed to pay the
(2021) 5 SCC 738
SK, J
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complete sale consideration and paid meager
amount. Though the agreement of sale was executed
in the year 2013, the applicant has approached this
Court in the year 2022 i.e, after a period of 9 years.
The documents relied on by the applicant 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 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
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Arb.Appl.177 of 2022
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
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 applicant has 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
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Arb.Appl.177 of 2022
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.
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
applicant herein had agreed to purchase the flat
admeasuring 3500 sq. feet in the ground floor of
Block-A in Tower No.A11 in the apartment known as
"Grand Luxus" with proportionate undivided share
in the common areas and amenities along with 3 car
parking, each slot in the 5 cellars +G+5 floors
together with proportionate undivided share in the
2023 SCC OnLine SC 657
SK, J
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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.
13. The respondents through their GPA holder
M/s.Fima Properties Private Limited had initially
entered into agreement of sale with the applicant on
27.01.2013 for the Flat in A block, Tower No.9 in the
Ground floor bearing No.G 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, Ground 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 applicant within 24
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Arb.Appl.177 of 2022
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
applicant 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
applicant along with like minded applicant reserves
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 applicant also
without asking any rent from the respondents paid
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Arb.Appl.177 of 2022
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
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 applicant has 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 respondent Nos.1 to 7 have
given their reply on 04.07.2022 and denied to
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Arb.Appl.177 of 2022
appoint arbitrator and the GPA holder of the
respondents has unclaimed the said notice. In view
of the same, the applicant is constrained to file
instant arbitration application under Section 11(5)
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:
2023 (7) SCC 1
2023 SCC Online SC 1666
SK, J
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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.
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 26.07.2018 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 applicant 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
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Arb.Appl.177 of 2022
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
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 applicant has issued notice
on 18.06.2022 calling upon them to appoint arbitrator and
the applicant, 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 26.09.2019 and the same was not
denied by the respondents. It clearly shows the
agreement of sale is in subsistence and continuation
till 26.09.2019 as the respondents have taken
payments from the applicant. The applicant
admittedly issued notice to the respondents on
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Arb.Appl.177 of 2022
18.06.2022 for initiation of arbitration proceedings.
Limitation starts from the last payment i.e.,
26.09.2019. For counting of limitation period for
proceeding to appoint arbitrator ends three years
from 26.09.2019. 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 applicant has
initiated arbitration proceedings within three years.
21. Further, in the Judgment relied on by the
Learned Counsel for the applicant 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
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-
(2022) 3 SCC 117
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Arb.Appl.177 of 2022
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.
(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
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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 notices
served to the respondents and the respondent Nos.1
to 7 have given their reply through their counsel
on 04.07.2022 and the service of notice by the
applicant is deemed service as the GPA holder, who
has received the amounts from the applicant, 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 applicant before filing of the
Arbitration Application.
23. In view of the above findings, the Arbitration
Application is allowed by appointing Sri Justice
Challa Kodanda Ram, Former Judge, High Court for
the State of Telangana, Hyderabad, as sole arbitrator
to adjudicate the dispute between the applicant and
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Arb.Appl.177 of 2022
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: 23.02.2024.
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 500 034
LR copy to be marked.
