Decided on April 01,2019

T R Venkatesh Aiyer, Secbad Appellant
Gharonda Builders And Developers, Hyd 6 Others Respondents


Sanjay Kumar, J. - (1.)By way of this application filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for brevity, 'the Act of 1996'), the applicant seeks appointment of a sole Arbitrator for resolution of his disputes with the first respondent firm and its partners, respondents 2 to 7. The applicant valued his claim at Rs.3,12,00,000/-.
(2.)According to the applicant, respondent 2, being the Managing Partner of the first respondent firm, was well acquainted with him and approached him in February, 2009 stating that he had entered into a registered Development Agreement-cum-General Power of Attorney with the owners of an extent of Ac.3.03 guntas situated at Pocharam Village, Ghatkesar Mandal, Ranga Reddy District. He informed the applicant that they were falling short of finance and requested him to invest in the said development. As security for the said investment, the respondents agreed to transfer some of the flats in the project to the applicant. The respondents promised that they would complete the multi-storied apartment complex within 40 months from the date of entering into an agreement with the applicant and also promised that a buyback option would be given to him in the event they failed to complete the project within the stipulated time or if the applicant was not willing to purchase the flats. In such an event, the respondents agreed to refund the amount invested by the applicant with attractive returns thereon. Five agreements of sale dated 20.03.2009, 27.03.2009, 02.04.2009, 06.04.2009 and 10.04.2009 were executed in relation to the five flats offered to the applicant. According to the applicant, he paid Rs.1,56,00,000/- to the respondents and as per the buyback option, the respondents agreed to repay him Rs.3,12,00,000/-. Alleging that the respondents failed to adhere to the schedule of construction, the applicant stated that he demanded repayment from the respondents in October, 2013. Three post-dated cheques were given to him by the respondents but they thereafter expressed difficulty in making payment owing to financial troubles. The applicant stated that as on 15.12.2014, the respondents had only paid him Rs.25,22,000/-. He got issued notice dated 08.07.2015 to the respondents invoking Clause 27, the arbitration clause in the agreements of sale. Despite receipt of the notice, the respondents did not choose to reply or give their consent for resolution of the disputes through arbitration. He therefore filed the present application.
(3.)Notice having been ordered, Sri Sharad Sanghi, learned counsel, entered appearance for the respondents and filed a counter-affidavit. Therein, respondent 2, the Managing Partner of the first respondent firm, asserted that the other partners of the firm, respondents 2 to 7, were not parties to the agreements of sale and therefore, the arbitration application filed against them was not maintainable. He stated that the agreements of sale were in the nature of bonds and therefore, they had to suffer stamp duty accordingly. He contended that in the light of Section 35 of the Indian Stamp Act, 1899 (for brevity, 'the Act of 1899'), the agreements of sale could not be looked into. He also contested the claim of the applicant on merits. A separate counter was filed by respondents 3 to 7 pointing out that they were not signatories or parties to the agreements of sale and therefore, no arbitration proceedings could be initiated against them. They contended that the arbitration application was barred by limitation.

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