ARBAPPL/200/2024 of M/s. Surabhi Infrastructures Vs M/s. Shafali Infrastructures Pvt. Ltd on 31 December 2024

ORDER:

I.h::s aplrlication is filed under Section 11(6) of the A.r'bitrationand Conciliatio'r Act, 1996, (for short 'the Act 1996') Ibr appointingsole arbitrator' 1o resolve the dispute arising between [applicant ][and]respondent in k:ms of Clause - 30 of the Development agreement [-]cum - Iri'evo<:able General Power of Attomey bearing documentNo.3174 of 2008 dated 30.07.2008 [(for ]short 'Agreement')2. It is :iubnritted that the applicant is the owner an<l possessor ofthe land admeasuring 42,280 square yards in Sun'ey Nos.314,315and 3 16 ;itt atcd at Singapur Village and Granr Panchayat,Shankerpalty lr'landal, Ranga Reddy District, i.e., schedule ]lroperty.The applir:ant entered into Agreement with respon<lent fordeveloprLent [,r ]f schedule property into multi-storeved rc'sidentialhouses/ housir L1; project with a total built up area of 20,000 squarefeet. As pe:r th: terms of the Agreement, the applicant [(orx'ner) ]andthe responrlent [(developer) ]are entitled for share of 37.5%o and,62.5%o of the lruilt-up area respectively. Respondent also cleposited a sum of Rs.30,00,000/- [(Rupees ][thirty ][lakhs ][only) ][towards ][interest]free refundable security [deposit. ][Respondent ][agreed ][to ][complete ][the]construction of duplex [houses ][within ][thirty ][(30) months ][from ][the]date of Agreement with a [grace ][period ][of six ][(6) ][months-]

3. It is submitted [that ][applicant ][and ][respondent entered into]rectification deed bearing [document ][No.408 ][of ][2010 ][dated]24.02.2010 changing the [share ][pattern ][to ][75o/o ][of ][land ][to ][the]applicant (owner) and [25o/o ][of ][land ][to ][respondent ][(developer)']Subsequently, applicant [and ][respondent entered ][into ][Supplemental]deed on 05.06.2010 specifring [the ][areas ][of ][entitlement ][to ][each ][party]vide registered document [bearing ][No.1312 ][of ][2010. ][Respondent,]apart from making [refundable ][interest ][free ][security deposit ][of]Rs.30,00,000/- also [deposited another ][sum ][of ][Rs.25,00,000/- ][(rupees]twenty five lakhs only) [towards refundable interest ][free ][security]deposit. In total [the ][applicant ][received Rs.55,00,000/- (rupees ][fifty]five lakhs only) from [respondent ][as ][interest ][free ][security deposit']4. It is submitted that [respondent ][- ][contractor ][and ][their ][people]misused the electricity [connections ][at, ][the ][schedule ][property ][by]." "tt w ;--' ,'/--:,. ,.//,/..-.r putting the rvires directly on the transmission lines illega ly. Thesame wasr cau{,-lt by the squad of Electricity Department along withsame wasr cau{,-lt by the squad of Electricity Department along withphotos and vi,Jeos and the Electricity Department kldged criminalcomplaint a,gairrst the applicant. The respondent paid fine amount tothe Elec,tricity Department to get over the crimin al case.complaint a,gairrst the applicant. The respondent paid fine amount tothe Elec,tricity Department to get over the crimin al case.Respondernl. hrrr; sold several plots to the third parties (paragraphNo.13 of the af[rdavit) in violation of the Agreement. In the monthof January 20 14, respondent left the site without cornplt:ting theNo.13 of the af[rdavit) in violation of the Agreement. In the monthof January 20 14, respondent left the site without cornplt:ting theproject rvithir.r the stipulated and agreed time with lcllorvingincomplere 'works:incomplere 'works:

(i) C cmpound wall not completely built, at tw c placescornpound wall fallen and it was not rebuilt.cornpound wall fallen and it was not rebuilt.

(ii) Sryne of the roads were not formed, formed loads arenol properly formed and full of grass life garden.nol properly formed and full of grass life garden.

(iii ) Slc,nes were not properly curbed and even completedal s,r peeled off from the positionsal s,r peeled off from the positions (i") D:rrinage works not completed, even panly d,cne alsoful of cracks because ofnon-curing.ful of cracks because ofnon-curing.

(u) Electrical works not yet completed. Because of [poor]

quality work even the completed portion also [getting]spoiled day to day.

As per the estimation of the applicant, [Rs. ]1,00,00,000/- [(rupees ][one]crore) needs to be expended to complete [the ][above ][works ][and ][the]same was brought to the notice of the [respondent ][vide e-mail ][dated]23.01.2014.Respondent was requested to complete the [work, ][but]they failed to complete the work, [as such, ][the applicant invoked ][the]Clause30 of the Agreement and [issued ][legal ][notice ][dated]02.07.2024.

5. It is submitted that in the [meantime, applicant ][filed ][petition]under Section 9 of the Arbitration Act [1996 ][against respondent ][in]Arb. O.P. No.2368 of 2017 before [the ][leamed ][XI ][Additional Chief]Judge, City Civil Court, Hyderabad [(for ][short ]['Trial ][Court'), ][seeking]for an order restraining respondent [from alienating ][or ][creating ][any]third party rights over the schedule [property. ][The ][Trial ][Court]passed the order dated 17.04.2018 [in ][favour of ][applicant. ][As per ][the]order of the Trial Court, [applicant ][tried ][to ][serve ][notice ][on]respondent to initiate arbitration. [Horx<{er, the applicant ][came ][to]

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know that res,rondent company had a change in its management andits Director is living abroad. In the year 2023, a represer.rtative ofrespondenl erLtered appearance in Arb. O.P. No.2368 of 2017 andfiled four Interlocutory Applications (IAs') i.e., I.A. No. i 1Z of 2023seeking leave of the Trial Court to enter his appearance, l.A. No.113of 2023 scek rrg to set aside the ex-parte order and decree dated17 .04.2018, L 1'. No.114 of 2023 seeking to recall the ex-parte orderand decrr:e da'sd 17 .04.2018 and LA. No.1 1 5 of 2023 seeking to setaside thc e-x-parte order and decree dated 17 .04.2018. [' ]lhe TrialCourt b1'the ,rrder dated 29.01.2024 inI.A. No.115 ol 2023 infub. O.P. lrlo 2368 of 2017 has recalled the order and decree dated11 .04.20l,8. LrLter, the applicant filed petition under Section 8 of theArbitration Act i996 in I.A. No. 1022 of 2024 in Arb. O.P. No.2368of 2017 to rel'er the matter to arbitration and the said petrtion washeard ancl reserved for orders

6. It is. sr- bmitted that applicant sent legal notic,e dated02.07 .20:14 tc respondent calling upon them to nomir ate solearbitrator out ,rl three (3) arbitrators named therein and re;pondent issued reply notice dated 09.07.2024 denying the [arbitration ][clause,]as such, the instant application is filed.

7. Learned counsel for the respondent filed counter [affidavit ][and]submitted that the arbitration application [is ][not ][maintainable. ][It ][is]contended that the Agreement has been [altered, ][varied ][and ][novated]by virtue of rectification deed bearing [document ][No.408 ][of ][2010]dated 24.02.2010 and supplemental deed bearing [document No.1312]of 2010 dated 15.06.2010. The [applicant ][has ][earlier ][issued ][legal]notice dated 02.11.2017 for which [the ][respondent ][issued ][reply]notice dated 30.11.2017. The applicant [failed ][to ][take ][legal ][recourse]thereafter. Further, the applicant [has ][not ][made ][the ][purchasers who]allegedly have purchased the [plots ]in [the ][schedule ][property ][(as]mentioned in paragraph No.l3 of [the affidavit) ][as ][parties ][to ][this]application. Thus, application is [liable ][to ][be ][dismissed ][for]non-j oinder ofnecessary [parties. ][Respondent ][has ][completed ][9O%o ][of]the work and remaining [10% ][of ][the ][work ][was ][not ][completed ][due ][to]prohibitory orders secured by third [parties against ][the applicant ][and]not due to fault of the respondent. [Respondent was always ready ][to]complete the balance work [and ][non-co;nPletion ][of ][l0% ][balance]

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work caflrot b,r solely attributable to [respondent. ][The ][clairn ][of ][the]applicant is holr:lessly bar:red by limitation.

8It is subnritted that petition [was ][filed ][by the ][applicant ][under]Section 9 of the Arbitration Act [1996 ][against ][resportdent]lntub. O.P. No.ll.]68 of 2Ol7 before the [Trial ][Court ][seeking an order]restraininlg respondent from alienating or [creating any ][third ][party]rights ovcr the :;chedule property. The [Trial ][Court ][passed ][the order]dated I 7 .0tl.2o i 8 in favour of applicant. As it [was ][an ][ex ][parte]order, respond,:'rt filed LA. Nos. 1 13 to [1 ][1 ]5 of [2023 ][to recall ][the said]order. T'hr: ['lrial ]Court vide the order [dated ][29.01.202'l' ][in ][I.A]No.1 15 ol ll02I has set aside the ex parte order dated ll [.04 ][2018. ][lt]is stated thzrt same claim was raised by the applicant [by ][issruing ][the]legal notice daled 02.11.2017 to which reply [notice ][rvas ][rssued ][to]respondent on 30. t 1.2017 . The present application is flledsuppressing, muerial facts and it is barred by limitation. [Thus, ][there]are no me'rits i-r the arbitration application.

9. It may be noted in the counter affidat'it filed by [the]respondent se.z,:ral other factual and adverled to legal contentions have been pleaded. However, as preliminary obj ection is raised bythe respondent to the maintainability of the arbitration application,the same are not being referred to in detail.

10. Leamed counsel for the respondent submitted that the causeof action for initiating arbitration proceedings initially arose [when]applicant issued legal notice dated 02.11.2017 wherein the applicantrequested the respondent company to [give ]consent for [arbitration]proceedings within thity (30) days. A reply notice dated30.11.2017 was issued by the respondent denying [the claim ]of [the]applicant contending that the claim is [false, ][frivolous ][and ][time]barred. Leamed counsel has also drawn the attention of this Courtto the contents of the legal notice dated 02.11.2017 and [legal ][notice]datedO2.O7.2024. The contents of the legal notice [dated 02.11.2017]are similar to that of legal notice dated02.07.2024,infact [they ][are]repetitive. The defective works based on [which ][monetary ][claim ][is]made and pointed out in the page No.3 of the [legal notice ][dated]02.11.2017 is exactly the same [in ][paragraph ][No.6 ][(b) of ][the ][notice]dated 02.07.2024. Though in [the ][legal ][notice ][dated ][02-11.2017]several demands including the monetary [claims ][are ][made ][as]

compared tc, legal notice dated 02.07.2024, the dispute is ryns andthe same i. e., regarding non-completion of the project.

11. Having ir;sued notice dated 02.11.2017 for nonrinatingarbitrator, the rpplicant did not pursue the matter firrther-. Theapplicant oulght to have filed petition under Section l1(6) of the Act1996 within thrt:r: years after expiry of thirty (30) days tiorn t.he dateof serwice of nctice dated 02.11.2017, which he f-ailed to do so.Thus, the cl:Lim ,tf the applicant is barred by the Article I 3-:, of theLimitation l\ct i 963. Merely by issuing second notice dated02.07 .2024, the cause of action would not revive. ['fhere ]are nomerits in thr: ar ritration application, accordingly it is disrnissed.There shall be n I order as to costs.

As a sequel thereto, miscellaneous applit:ations, if any. pending in the arbitration application stand closed.

Sd/. M. VIJAYA BHASKERrforl,rur [REGISTRAR]

//TRUE COPY//

$EcTION OFFICER

To,

1. One CC to Sri R;rvikiran Singh, [Advocate ][OPUCj^^

2. One CC to [Sri ]Arvind KumaiAgarwal, [Advocate ][OPUC]

3., Two CD Cc,piesIo-

HIGH COURl'

DATED: 311122024

ORDERARBAPPL.No.200 of 2024

DISMISSING THEARBITRATION APPLICATION

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